ACP-California
Submitted 01/29/2021, 02:16 pm
Submitted on behalf of
American Clean Power-California
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
ACP-California offers a few specific comments on elements of the RA Enhancements Sixth Revised Draft Proposal in the subsequent responses to questions from CAISO. However, our primary concerns relate to the overall treatment of Hybrid Resources in CAISO and span across this initiative, CAISO’s implementation of the Hybrid Resources policy, and other venues. The treatment of Hybrid (and Co-Located) resources is likely to impact the quantity of resources that will come online in the next few years (the speed at which they will be able achieve commercial operation) as well as the ultimate ratepayer cost of securing those resources.
The lack of established market mechanisms to prevent against grid charging (and loss of the Investment Tax Credit) under CAISO’s currently proposed policy initiatives applicable to Hybrid resources could delay the addition of these resources onto the grid and may drive up ultimate ratepayer costs. While we recognize the need to ensure reliability and certainly support CAISO’s efforts to do so, tailored approaches can and should be designed to meet the needs of the grid and ensure reliability, while also ensuring low cost, reliable power can be delivered to customers and that the owners of these resources are provided with some level of assurance that their grid charging can be minimized, which is critical to successful project financing.
CAISO does not appear to understand the serious implications of its Hybrid policies on the market, nor the challenges of ensuring these contracts can be arranged to address the needs of the resource owner, the offtaker (scheduling coordinator) and the tax equity investor. We urge CAISO to consider the implications of its Hybrid policies, mostly notably the lack of any ability to ensure with certainty that grid charging can be controlled. We also urge CAISO to consider ACP’s alternative straw proposal, put forward in for consideration later in these comments, and how it may help provide more assurances that there will be reasonable restrictions on grid charging (but that grid charging can still occur when needed for system reliability). We stand ready to meet with CAISO to further explain these comments, the preliminary proposal on grid charging, and our concerns related to project financing. We are also open to working collaboratively with CAISO to help craft a solution that, first and foremost, meets reliability needs but also ensures that some protection are put in place to keep ratepayer costs low and can be implemented within the multi-party contracting paradigm in which these resources are being developed.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
ACP Shares Concerns Around Contractual Implications of Redefining NQC to Equal UCAP
ACP share the concerns expressed by other parties, including LSA and SEIA, around changing the definition of NQC to align with UCAP. This is likely to have significant, negative consequences for PPAs that are executed (or near execution) and rely on RA payments per MW of NQC. Those contracts refer to NQC as currently defined, and not as it would be discounted through changing the definition of NQC as proposed in this initiative. Further, these resources would be unfairly penalized both through lower payments and through application of availability requirements in the contract. We echo the concerns raised during the stakeholder meeting and urge CAISO to reconsider this element of the proposal and allow individual parties to renegotiate contracts to address the implementation of UCAP.
UCAP Assessment Hours Should Align with Tight System Conditions (not Tight RA Supply)
ACP agrees with other commenters that spoke up during the stakeholder meetings: the “RA supply cushion” paradigm that CAISO proposes to use for determining UCAP assessment hours is flawed and it would be better to, instead, focus the UCAP assessment hours on actual tight system conditions. Actual shortage conditions, rather than artificially determined “RA shortage” positions, are the conditions when it is most critical for resources to perform and, UCAP assessment hours should be in line with the times it is most critical to have resources perform well. Furthermore, it will also be highly difficult for resources to know and understand when RA resources, specifically, are in short supply. Thus, we support comments made by others that would modify the UCAP assessment hours to align with the 20% of hours with the tightest overall supply cushion.
CAISO’s Proposal for Hybrid UCAP Calculations is Flawed, Treats Similarly Situated Resources Differently, and, therefore, CAISO Should use the Same UCAP Calculation Approach for Hybrids as it has Proposed for Co-Located Resources
ACP-California continues to oppose CAISO’s disparate treatment of similarly situated Hybrid and Co-Located resources for purposes of determining UCAP, as proposed in the Sixth Revised Straw Proposal. ACP-California (formerly AWEA) has previously submitted more in-depth comments on this issue and points CAISO back to those previous comments, as well as the concerns expressed by multiple parties during the stakeholder meetings.
We appreciate that CAISO provided example calculations of the Hybrid UCAP as was requested in our previous comments. While we appreciate these examples, they do not alleviate previously expressed concerns about the treatment of Hybrid resources for UCAP purposes. In fact, they appear to demonstrate the point that the current proposal for Hybrid UCAP calculation discriminate against Hybrid Resources by treating them differently than Co-Located Resources and would likely result in a lower UCAP value for a similarly situated Hybrid as compared to a Co-Located configuration. The proposal is especially flawed because, rather than focusing exclusively on resource availability during UCAP assessment hours, it would cap a Hybrid’s UCAP value at the QC amount, even if its actual availability were greater. This will negatively affect Hybrid resources and unnecessarily restricts their UCAP values.
For the initial implementation of UCAP for Hybrid and Co-Located resources, CAISO should focus on comparable treatment and well understood approaches. Thus, CAISO should treat Hybrid Resource UCAP calculation the same as the underlying components (e.g. the same as Co-Located Resources). After gaining operational experience with these resources, CAISO should determine whether modifications are needed, evaluate alternative UCAP approaches, and consider whether different treatment is necessary and appropriate for Hybrids compare to Co-Located resources. Alternative approaches that might be pursued in the future should both seek to treat resources with similar availability and operational characteristics comparably and to ensure the greatest consistency possible between the CAISO’s approach and that of the CPUC (and other regulatory authorities).
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
As described in the introduction to these comments, ACP-California has serious concerns about the combined effect of CAISO’s proposed treatment of Hybrid Resources through this initiative and the implementation of the Hybrid Resources initiative policies. CAISO has seemed to close out any opportunities for these resources to place any reasonable restrictions on grid-charging concerns and, instead, is proposing to classify all Hybrids as NGRs and impose a MOO for the full charging and discharging capabilities on NGRs. While these resources can certainly use bids to reflect the costs of grid charging (to some extent), there is a need for additional certainty that grid charging can be limited and that resources can avoid the “ITC cliff” (which refers to the circumstance where a resource reaches 25% grid charging and loses its ITC eligibility for the storage component).
To address this, ACP-California offers the following alternative straw proposal for consideration, which would, in part, be implemented through changes to CAISO MOO for NGR Hybrid Resources as proposed in this Sixth Revised Straw Proposal. We offer this as a starting place for further discussion and consideration with CAISO and other stakeholders and look forward to further discussions.
Alternative Straw Proposal for Hybrid Resource MOO:
- Certain Hybrid Resources should be grandfathered and should not have obligations to grid charge (nor MOOs for the charging component or, alternatively, a method to indicate a PMin of zero to CAISO)
- This will address the commercial reality that there are signed (or very near signed) PPAs that explicitly prevent grid charging and they may be at risk of not being completed on time if there are not assurances that grid charging can be prevented
- Hybrid resources should be provided an optional, alternative MOO approach for the first five years of resource operations to address ITC issues and help ensure low-cost financing of these resources. Under this optional, alternative approach:
- Hybrid Resources should only have a 24x7 MOO for their discharging component (and not for the charging portion of the resource)
- However, to meet reliability needs, CAISO should have the ability to insert bids for the charging component during certain tight system conditions (e.g. <8% or 10% reserve margin expected in that hour based on forecasted day-ahead resource availability)
- The bid insertion for this charging component should be based on values that are provided by the resource owner to CAISO to reflect ITC recapture costs (which can be reviewed and/or verified by CAISO)
- Compensation for use of the resource’s charging component, using bid insertion described above, should have a separate product name/charge code in CAISO settlements to enable easy pass through of these revenues from the Scheduling Coordinator to the resource owner
- This will help ensure the PPA can be structured so that ITC-related costs can be easily passed to the party bearing them
We hope that CAISO will be open to further discussions around the treatment of Hybrid resources in its market policies and the implications for the ITC and contracting. We would be pleased to spend time with CAISO discussing this alternative proposal and considering modifications or different options. Ultimately, the goals of CAISO, hybrid offtakers, and resource owners/developers are aligned in seeking reliability while providing low cost, clean energy to ratepayers. We hope to work collaboratively with CAISO to arrive at a targeted set of rules that can provide CAISO the assurances it needs to obtain grid charging form Hybrids when necessary (and economic) while also providing some limits on grid charging which will allow these projects to be financed, begin construction, and come online to meet the grid’s needs. We look forward to working with CAISO and other stakeholders to find a targeted solution.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Arevon
Submitted 01/29/2021, 07:40 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
- Capital Dynamics strongly opposes the redefinition of Net Qualifying Capacity
- UCAP discriminates against distribution-connected Storage Resources and should be not implemented until this issue is corrected
- The New-Resource UCAP is ineffective and should not be adopted
- We agree with CESA that CAISO should not impose a must-offer obligation for the charging of non-generator resources
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Capital Dynamics strongly opposes the redefinition of Net Qualifying Capacity. If adopted, this definitional change would have a material impact on existing contracts and would inappropriately allow CAISO to interfere with off-take agreements that were negotiated bilaterally with LSEs, outside of a centralized capacity market.
In the Draft Final Proposal, CAISO notes that “NYISO, PJM, and MISO incorporate forced outages when calculating each resource’s qualifying capacity value and measure capacity value using UCAP…,” as a reason to implement UCAP, but this comparison is flawed. NYISO, PJM, and MISO operate centralized capacity markets under which capacity prices adjust over time to reflect the cost of UCAP to varying technologies. In the bilateral capacity market that California operates, the CAISO’s proposed redefinition of NQC would, in many cases, result in a revenue “haircut” to generators who are paid based on the current NQC methodology. By replacing the existing NQC definition with a UCAP calculation, CAISO would be unfairly discriminating against dispatchable capacity resources such as energy storage, which are most often paid on NQC, and those with existing contracts, whose revenues are likely to decrease.
In addition, resources connected to the distribution grid face further challenges. Many RA-Only or Power Purchase Tolling Agreements (“PPTA”) contain a provision that the Seller has an obligation to repair the generating facility if the NQC falls below a certain threshold. In the case of a Wholesale Distribution Tariff-interconnected storage resource, how would a seller go about repairing a reduction in NQC that is caused by charging restrictions arbitrarily placed on it by the distribution provider? Would the storage resource be in a position to “repair” the distribution provider’s study methodology, which is expected to evolve as the market matures? Changing the definition of NQC causes more problems than it solves; thus, the idea should be rejected.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Capital Dynamics strongly opposes the UCAP proposal and recommends delaying implementation until key issues are addressed.
UCAP Discriminates Against Distribution-Connected Storage Resources
Under UCAP, the CAISO is proposing that storage resources interconnected under a Wholesale Distribution Tariff (“WDT”) would be subject to a reduction in NQC if the storage resource is unable to bid its full charge capability due to distribution-level outages or derates. Utility Distribution Companies have recently started to provide storage resources interconnected at the subtransmission level (66kV-115kV) “paper schedules” that restrict charging on an annual basis. These paper schedules are based on an N-1 contingency and peak load and have led to overly burdensome charging restrictions. Under this proposal, CAISO grid transmission problems and imports would not count against UCAP, but distribution level outages would count against UCAP. As a result, CAISO will be unfairly discriminating against storage resources that interconnect under a WDT.
CAISO claims that there is insufficient time before UCAP is implemented to establish the necessary communication and validation protocols with distribution-system providers to extend the UCAP impact exemption to distribution-system problems. This is the exact reason that UCAP implementation should be delayed.
In addition, the UCAP proposal will perversely incentivize developers to site new storage resources on the bulk transmission system under the CAISO Tariff, rather than siting new storage resources close to load and taking service under the IOU’s WDAT. These additional storage resources on the CAISO-managed transmission system will be competing for deliverability with new renewable resources, hampering the state’s progress in meeting its carbon emissions reduction goals. Rather than taking advantage of the complimentary nature of storage and renewable resources, the UCAP proposal penalizes distribution-connected resources and encourages new storage assets to add to the competition for scarce transmission capacity.
Unless the UCAP proposal is amended to address these obvious pitfalls, it should not be adopted.
The New-Resource UCAP Is Ineffective
Most new resources, regardless of the technology, experience a “break-in” period in the first year or two, causing outages rates that are above the unit’s long-term average. Using the DQC in Year 0 for new resources will not accurately reflect the unit’s outage rates and will not incentivize new resources to use commercially proven equipment or perform adequate commissioning before declaring commercial operation. In short, the New-Resource UCAP is ineffective and should not be adopted.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
Capital Dynamics agrees with CESA's comments on the Must-Offer Obligation (MOO). Specifically, CAISO should not impose a must-offer obligation (MOO) for the charging of non-generator resources (NGRs). And, if imposed, CAISO should amend its MOO proposal for NGR assets to properly value and acknowledge the nature of resources interconnected under the wholesale distribution access tariff (WDAT).
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
California Community Choice Association (CalCCA)
Submitted 01/29/2021, 03:02 pm
Submitted on behalf of
CalCCA
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
- CalCCA believes that using the top 20% may overstate the unavailability of resources that happen to be forced out during the tightest supply cushion hours, while those that happen to be forced out during the remaining 80% of the hours will have their unavailability underestimated.
- Hybrid resources should be treated similarly to their co-located counterparts and calculating hybrid NQC values based on the sum of the UCAP/NQC values of their individual components, limited to the POI capacity.
- CalCCA is concerned that CAISO’s proposed approach of using the 1-in-5 load forecast plus 6% operating reserve margin under the UCAP RA methodology hasn’t been adequately assessed with a thorough probabilistic loss of load expectation analysis.
- CAISO should not penalize hybrid or co-located resources for self-scheduling their VER production for storage charging that otherwise would displace grid charging.
- CalCCA supports CAISO’s decision not to implement a UCAP incentive mechanism that would compensate parties that show more than their share of the RA requirement and to charge entities that show less than their share.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Support with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
CalCCA appreciates the CAISO’s efforts to provide further data analysis around the 20% threshold selection. We continue to have concerns, however, that due to the random nature of forced outages, resources that happen to be forced out during the tightest supply cushion hours will have their unavailability overestimated (by up to a factor of 5), while those that happen to be forced out during the remaining 80% of the hours will have their unavailability underestimated. This will give the misimpression that some shown RA resources will perform much worse than they are likely to actually perform, while others will perform much better than they are likely to be able to perform. This effect will be ameliorated to some extent by averaging performance over several years, but CAISO should monitor the predictive ability of this methodology against actual resource performance to determine if adjustments should be made in the future.
Storage
CalCCA supports the CAISO’s revision to apply the basic UCAP methodology using seasonal availability factors to storage resources.
Hybrid Resources
CalCCA appreciates CAISO’s clarification that the final NQC of hybrid resources will be based on the lower of the CPUC’s QC value and CAISO’s calculated UCAP value so as not to double penalize hybrid resources. However, CalCCA remains concerned that relative to co-located resources, CAISO’s proposal disadvantages hybrid resources’ RA value. In CAISO’s examples shown in Tables 13 and 14, the calculated UCAP provides the final NQC value in nearly every month for both resources A and B. This suggests the UCAP calculation that includes dynamic limit impacts has the effect of further derating the estimated capacity value of hybrid resources relative to the CPUC’s methodology and yields a different result than the approach for co-located resources even though the same factors that drive the hybrid derate apply to the co-located resources. This hybrid derate is likely due to the application of dynamic limit impacts that reflect unavailability of the variable resource component, which CAISO acknowledges is not an appropriate approach for standalone variable resources. Rather than penalize hybrid resources due to this misapplication of the dynamic limit impacts, CalCCA supports treating hybrid resources similarly to their co-located counterparts and calculating hybrid NQC values based on the sum of the UCAP/NQC values of their individual components, limited to the POI capacity.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
CalCCA supports exploring a minimum Planning Reserve Margin standard but is concerned that CAISO’s proposed approach of using the 1-in-5 load forecast plus 6% operating reserve margin under the UCAP RA methodology hasn’t been adequately assessed with a thorough probabilistic loss of load expectation analysis to weigh the risk of potential outages and to compare that against the potential costs and benefits of reducing those risks. This assessment should be done as part of the portfolio analysis effort in Phase 2B that will identify the methodology to be used to evaluate the RA portfolio performance and to set the criteria to be used to trigger backstop procurement.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
CalCCA supports CAISO’s proposal to not allow LSEs to procure only the unforced portion of a resource. The UCAP/NQC approach necessitates that LSE’s only be allowed to show the amount of capacity that takes into consideration appropriate counting rules, deliverability and forced outage rates
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
CalCCA supports CAISO’s proposal for the Must Offer Obligation (MOO) to be linked to each resource’s Deliverable Qualifying Capacity (DQC), rather than the UCAP/NQC shown. The full capability of the resource that is used to support the UCAP/NQC needs to be made available to the CAISO, even though that amount typically will exceed the UCAP/NQC. Because LSEs will effectively be providing capacity to account for forced outages upfront, CAISO will no longer need to apply forced outage substitution.
CalCCA supports the MOO for eligible intermittent resources to be set at their full forecasted amount in real-time, but we are concerned that both hybrid resources and co-located resources with ITC grid charging restrictions need to have a mechanism to allow them to schedule in such a way that they can meet both the MOO and be able to generate energy that allows them to charge the storage component with the VER component when it is economical to do so. CAISO should not penalize hybrid or co-located resources for self-scheduling their VER production for storage charging that otherwise would displace grid charging.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
CalCCA supports the CAISO proposal to continue running the local capacity studies exactly as is done today using DQC. CalCCA remains concerned, however, that converting the local DQC amounts to UCAP/NQC for local capacity resources won’t add any value given that the current pool of available local resources is limited and is already constrained both by resources’ effectiveness factors and their forced outage rates. As new resources are added, incorporating forced outage rates into the local RA evaluation will incentivize increased reliability, but we are concerned that overlaying the UCAP requirement on local capacity resources may unnecessarily complicate the local capacity procurement process. Further, as noted in our previous comments about the challenges presented by CAISO’s proposal to require replacement capacity for all maintenance outages, CAISO will need to address this issue explicitly for local capacity resources if it doesn’t adopt a planned outage reserve margin approach, since there will be little or even no effective local capacity resources that will be available to provide substitute capacity for planned maintenance. Finally, CAISO should coordinate with the Central Procurement Entities to ensure that if it does apply the UCAP/NQC requirement to local capacity areas, that doing so does not result in an increase in local capacity procurement requirements without balancing costs and benefits.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
CalCCA supports CAISO’s decision not to implement a UCAP incentive mechanism that would compensate parties that show more than their share of the RA requirement and to charge entities that show less than their share. We believe it is better to encourage parties to make their resources available in the bilateral forward markets and that CAISO’s decision on this point will lead to better market outcomes.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
CalCCA supports CAISO’s proposal to modify its existing CPM authority to procure additional capacity if CAISO identifies the need to procure local RA after a local area or sub-area fails to meet the energy sufficiency test.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
CalCCA supports CAISO’s proposal to take into consideration resources’ UCAP/NQC in making CPM designations. CAISO also will need to consider effectiveness factors for local resources and for system resources that have beneficial impacts on meeting local requirements.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
CalCCA agrees that the portfolio assessment approach, the planned outage pool/planned outage margin, and flexible resource adequacy elements all merit further effort towards developing appropriate solutions. CalCCA looks forward to working with CAISO on these Phase 2B pending enhancements, but as noted in our comments above on Item 5, minimum system resource adequacy requirements, identifying the methodology to be used to evaluate the RA portfolio performance and to set the criteria to be used to trigger backstop procurement is critically linked to determining the appropriate planning reserve margin. Thus, this element is particularly important for the overall RA Enhancements effort.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
California Energy Storage Alliance
Submitted 01/29/2021, 11:04 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
CESA appreciates the work of the ISO on this initiative as well as the opportunity to provide feedback and recommendations related to it. As the ISO has divided this initiative into three distinct phases (namely, Phases 1, 2A, and 2B), CESA urges staff to consider all elements included in the Draft Final Proposal and the Sixth Revised Straw Proposal in a coordinated fashion. This implies that staff look not only at the reforms envisioned by the ISO, but also the modifications being considered within the California Public Utilities Commission’s (CPUC) Resource Adequacy (RA) proceeding. Coordination among both of these processes is fundamental to preserve contract certainty and minimize market disruptions.
In light of the growing concerns to maintain reliability as the state’s grid evolve, CESA requests the ISO retains its commitment to market principles of economic efficiency, open access to the participation of different resources and technologies, and the proper valuation and compensation of all services and products provided by the wide array of resources currently participating in the ISO’s markets.
In general, CESA is supportive of the ISO’s intent to incorporate unforced capacity (UCAP) evaluations into the RA program. CESA recognizes the ISO’s responsiveness to stakeholder feedback as it relates to the evaluation of alternate methodologies for UCAP assessments and the impact of transmission-induced outages on the UCAP framework. The inclusion of this feedback strengthens the present proposal. Nevertheless, there are still several areas where CESA considers further analysis and substantial revisions are necessary. In these comments, CESA focuses on issues related to the Sixth Revised Straw Proposal, most of them raised by stakeholders during the stakeholder calls held January 5, 6, 7, and 15. CESA’s comments can be summarized as follows:
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Support with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
CESA generally supports the ISO’s efforts to incorporate the UCAP into the capacity valuation process for assets that seek to provide RA within CAISO’s footprint. CESA understands that an estimation of availability is necessary for the ISO to ensure the continuous and reliable operation of the electric grid. While CESA recognizes the ISO staff’s consideration of feedback shared by stakeholders, CESA does not yet fully support the ISO’s proposals on this issue. CESA’s caveats are explored further in answers to Questions 4 through 7.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
The ISO should consider calculating UCAP values based on the top 15% of hours with the tightest supply cushion, by season.
In comments to this initiative’s Fifth Revised Straw Proposal, CESA recommended the ISO consider a methodology based on the top 15% of hours with the tightest supply cushion, by season. This methodology is aligned with the ISO’s stated preference with the modification that it would decrease the number of hours considered for UCAP calculations. Given CESA’s proposal, ISO staff evaluated the potential difference between approaches focused on the top 10, 15, and 20% of hours with the tightest supply cushion, by season. The results of these analyses have been included in the Sixth Revised Straw Proposal and were covered during the January 5, 2021 stakeholder meeting.
CESA appreciates the ISO’s consideration and evaluation of its proposal. Given the results shared by ISO staff, CESA continues to believe a methodology based on the top 15% of hours with the tightest supply cushion is adequate as it: (1) represents an adequate balance with regards to the number of hours evaluated daily that fall within the net load ramp period (hour-ending (HE) 18-22) and those that do not; (2) covers an adequate share of the day; and, (3) limits the total number of hours considered per year in a manner consistent with the methodologies applied by other regional transmission organizations (RTOs).
As it can be observed in Table 7 of the Sixth Revised Straw Proposal, incorporating a higher share of hours with the tightest supply cushion for UCAP yields diminishing marginal returns in terms of the percentage of UCAP availability hours (AHs) between HE 18-22 and the percentage of the day covered by the sample. Below, CESA presents Table 1, which illustrates the percentage differences between the 10% and 15% options relative to the 20% proposal.
Table 1. Differences in the percentage of hours falling within the net load ramp period and the percentage of the day covered, by proposal.
|
Metric
|
Percentage difference under the 15% methodology (relative to 20%)
|
Percentage difference under the 10% methodology (relative to 20%)
|
|
Percentage of UCAP AH between 18-22
|
+ 10.76%
|
+ 19.97%
|
|
Percentage of day covered by the sample
|
- 11.52%
|
- 29.20%
|
These values show that, relative to the 20% proposal, the 15% alternative only increases the focus on the net load ramp by about 10.8% and reduces the percentage of the day covered by about 11.5%. In contrast, these percentage differences are nearly twice and three times as large under a 10% methodology. Thus, there are substantial diminishing returns as the percentage of tightest supply hours are increased, a factor that should be considered by the ISO in its development of a reasonable methodology. This is especially relevant considering that the methodology proposed by the ISO would result in an excessive number of hours being assessed in comparison to the practices of other ISOs and RTOs. As CESA noted previously, the New York ISO (NYISO), for example, bases its UCAP-equivalent process on an analysis of the performance of assets during the Summer and Winter Peak Hours, totaling about 736 hours per year.[1] As such, CESA recommends that the ISO consider the merits of a methodology based on the top 15% of hours with the tightest supply cushion, by season. This methodology continues to capture the factors the ISO deems essential while avoiding the establishment of a requirement far above those observed in other markets.
The ISO should modify the proposed outage definitions in order to account for the potential of resources being unavailable due to distribution outages or restrictions beyond their control.
In comments to the Fifth Revised Straw proposal, CESA and other stakeholders noted the need for the ISO to reevaluate the outage definitions considered in this section to avoid discounting the UCAP of resources due to outages or failures of the electrical system beyond a resource’s control (i.e., transmission outages). Following stakeholder feedback, the ISO has recognized the fairness of this request and modified the outage definitions to allow the capture of transmission failures within the CAISO system and limit the impacts of such outages on the UCAP of affected resources. CESA appreciates the ISO’s consideration of this issue, as it is fundamental for the success of the UCAP framework to fairly value the availability of assets based on the operational behavior attributable directly and solely to the assets themselves.
In light of this modification, parties raised questions during the January 5, 2021 meeting regarding how this issue would be addressed for resources interconnected via the WDAT. In response to stakeholder’s concerns, the ISO noted that it would be operationally complex to take into account distribution-level outages as the ISO has limited visibility into that level of the broader electric system. CESA understands the complexity of this matter and urges the ISO to consider the possibility of leveraging its authority under Section 4.4.1 of the CAISO Tariff to access all information pertaining the physical state of operation, maintenance, and failure of a utility distribution company (UDC) to inform the classification of outages for WDAT-interconnected assets. This provision could help the ISO determine if a WDAT-resource’s unavailability pertains to maintenance or failure within the UDC’s distribution system. As the determination of UCAP hours is done in an ex post fashion, CESA considers the rate at which this information is shared need not be immediate and could be incorporated via a verification and adjustment process once seasonal average availability factors (SAAFs) are being calculated.
The ISO should refine its proposal to determine the UCAP value of new resources based on their DQC by reverting to Option 2 as defined in the Fifth Revised Straw Proposal as to better represent the learning curve of new resources.
In comments previously filed under this initiative, CESA expressed support for the use of a modified version of Option 2 to derive the UCAP values of resources without three full years of historic operation data. Specifically, CESA recommended modifying the weighting of Year 0 performance and DQC for Year 1. CESA considers this would mitigate the potentially sharp decrease resources could experience after their initial commercial operation date (COD), where some quick but normal tuning is expected and may not be indicative of future performance.
While CESA appreciates the ISO’s decision to calculate the UCAP of new resources in a manner consistent with Option 2, the modifications proposed within the Sixth Revised Straw Proposal only deepen the impact a resource’s expected learning curve would have on its ongoing UCAP assignation. The ISO’s revised Option 2 defines UCAP calculations for new resources as follows:
- Year 0 (i.e., before operational data is available): DQC
- Year 1 70% Year 0 SAAF; 30% DQC
- Year 2 55% Year 1 SAAF; 45% Year 0 SAAF
- Year 3 45% Year 2 SAAF; 35% Year 1 SAAF; 20% Year 0 SAAF
For the reasons included above, CESA does not support this revised calculation proposal and recommends the ISO instead applies a methodology consistent with Option 2 as defined in the Fifth Revised Straw Proposal, which is warranted as it received broad stakeholder support.[2] Moreover, given energy storage represents a substantial share of the resources coming online in the near future and the ISO’s data analyses on UCAP show minimal derates for these assets (values range 95% and 96%, depending on the season),[3] CESA believes this proposal carries minimal overcounting risks.
As such, CESA’s recommendation would be for the ISO to apply the following methodology:
- Year 0 (i.e. before actual operational data is available): DQC
- Year 1: 70% year 0 SAAF, 30% DQC
- Year 2: 55% year 1 SAAF, 35% year 0 SAAF, 10% DQC
- Year 3: 45% year 2 SAAF, 35% year 1 SAAF, 20% year 0 SAAF.
The ISO should carefully consider the language included in this initiative to minimize contract disruption related to the redefinition of DQC and NQC.
In the Fifth Revised Straw Proposal of this initiative, the ISO described two different approaches to align the current NQC language with the modifications a transition to the UCAP paradigm requires. In this context, the ISO offered two options:
- Option 1: Option 1 would create a two-step de-rate process to a resources QC. The first step in this process would be to conduct a resource deliverability assessment to adjust QC for deliverability and create a new term, DQC. The DQC would take the place of the NQC term used today. The second step is to apply the Weighted SAAF to the resource’s DQC, which would result in the NQC for the resource. The new definition of NQC would represent the UCAP value of the resource.
- Option 2: Option 2 would retain the existing definition of NQC and create a new term (UCAP) to represent a resource’s capacity value. This approach would apply the Weighted SAAF to the resource’s NQC value, and result in the new UCAP value. This approach would not introduce the potential confusion resulting from a dual meaning of the term NQC over time.
In the Fifth Revised Straw Proposal the ISO noted that there was a split among stakeholders regarding the application of either Option 1 or Option 2, noting that further feedback was required on this issue.[4] Despite the ISO’s recognition of said split, this issue has not been further discussed since and the ISO seems to have defaulted to Option 1 without providing a clear list of pros and cons associated with each option, as noted in the Fifth Revised Straw Proposal.[5] CESA strongly supports the adoption of Option 2, as we consider it is better-equipped to provide the adequate incentives for parties involved in RA contracts to mitigate the potentially disruptive effects of the ISO’s proposed UCAP framework. Thus, CESA requests the ISO carefully consider this issue in future discussions to allow stakeholders to better understand the potential impacts of these redefinitions.
[1] See NYISO, “Installed Capacity Manual”, updated June 2020, at 57.
[2] Sixth Revised Straw Proposal, at 90.
[3] See CAISO, “Day 1: RA Enhancements Draft Final Proposal and Sixth Revised Straw Proposal”, January 5, 2021, at 87.
[4] Fifth Revised Straw Proposal, at 37.
[5] Ibid.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
CESA offers no comments at this time.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
CESA offers no comments at this time.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
The ISO should not impose a MOO for the charging of NGR assets.
In the Sixth Revised Straw Proposal, the ISO has introduced the concept of a MOO that reflects both the charge and discharge capabilities of resources participating under the NGR model. CESA strongly opposes this proposal, as it is unnecessary given the existence of management tools (e.g., the end-of-hour state-of-charge (EOH SOC) tool) and market incentives and penalties that generally promote the behavior the ISO advocates for. Moreover, CESA has noted previously in this initiative that, in order to improve the optimization of NGR assets, the ISO must address fundamental issues with its multi-interval optimization (MIO) process.
The current MIO tool does not adequately process the bid curves submitted by storage assets due to the tool’s focus on conventional resources. As a result, the MIO software’s operation can lead to undesired discharge in intervals prior to the evening peak, potentially causing reliability concerns and resulting in suboptimal decisions being made despite the NGR’s use of a clear bid curve. To resolve this issue and obviate the need for a charging MOO, CESA supports the proposals made by LS Power in comments related to Phase 1 of this initiative. Namely, that the ISO should: (1) link real-time dispatch (RTD) instructions directly to the binding interval and not the advisory intervals; or, (2) reduce the number of advisory intervals for NGRs from 13 to two or three. CESA believes these recommendations, paired with instruments such as the EOH SOC, would eliminate the need for a charging MOO as resource owners already face strong incentives to align their behavior with reliability-driven outcomes (i.e., abide by their DA schedules given the penalties associated to them).
If imposed, the ISO should refine its MOO proposal for NGR assets to properly value and acknowledge the nature of resources interconnected under the WDAT.
As emphasized above, CESA opposes imposing a MOO for the charging of NGR assets. This is unnecessary and reduces market efficiencies that storage can provide. If and as the MOO proposal is considered though, the ISO should be aware of developments for distribution-connected resources. Specifically, within the MOO proposal for NGRs, the ISO notes that the requirement for the charging range would be applied to NGRs regardless of their point of interconnection.[1] However, unlike the networked transmission system, WDAT-interconnected assets may face charging limitations that are imposed exogenously by the resources’ respective UDC. As more WDAT-interconnected projects have come online, particularly in locations where Southern California Edison (SCE) operates as the UDC, projects have started to receive “paper charging schedules” with conservative charging restrictions that these facilities must abide by, which are developed in accordance with the UDC’s N-1 criteria and lack time-based granularity. These restrictions, paired with the ISO’s proposal, represent significant access limitations for WDAT-interconnected NGRs. Based on the conversation CESA had with ISO staff during the January 15 stakeholder call, we believe the ISO might have not been aware of these considerations. As a result, and in order to mitigate these conditions, CESA urges the ISO to, ad minimum, refine its MOO proposal for WDAT-interconnected NGRs to recognize the nature and value of WDAT resources and allow them more flexibility in their charging requirements by integrating distribution-level information provided by UDCs to inform their MOOs. This could be potentially achieved by leveraging the ISO’s authority under Section 4.4.1 of the CAISO Tariff to access all information pertaining the physical state of operation, maintenance, and failure in a UDC's Distribution System to inform the charging potential/limitations of WDAT-interconnected assets.
At the same time, CESA again stresses that MOO for the charging of NGRs is unnecessary and is an element that we oppose. The above is added for important consideration if the ISO does end up moving forward with this element of the proposal.
[1] Sixth Revised Straw Proposal, at 108.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
CESA offers no comments at this time.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
CESA offers no comments at this time.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
CESA offers no comments at this time.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
CESA offers no comments at this time.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
Please refer to the last section of CESA’s answers to Question 4.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
CESA offers no comments at this time.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
The ISO should continue to develop a planned outage pool proposal that recognizes load-serving entities (LSEs) are in a unique position to manage outage substitutions.
In comments related to the Draft Final Proposal of this initiative, CESA noted the ISO's near-term proposal – i.e., to require all RA resources requesting planned outages to submit substitute capacity – overlooks the benefits of assigning the substitution obligation to the load-serving entities (LSEs). CESA considers LSEs have a more complete visibility into their RA requirements and portfolios, making them uniquely capable of understanding and managing the risk related to outage substitutions. As such, the ISO should consider these factors in the development of its long-term planned outage pool proposal. Moreover, CESA recommends this proposal closely aligns itself with the ISO's proposal to establish a planned outage reserve margin for off-peak months ("Option 1" within the Fourth Revised Straw Proposal), albeit making it applicable for all months. This option provides the correct incentives for LSEs to procure and plan ahead in order to minimize the risks related with planned outages; while sending market signals related to the need for increased RA-related procurement.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
CESA offers no comments at this time.
California Public Utilities Commission - Energy Division
Submitted 02/24/2021, 11:30 am
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Energy Division Staff (hereafter, “ED Staff” or “Staff”) appreciates many of the recent changes made to CAISO’s sixth revised RA Enhancement straw proposal. The comments below focus on Phase 2A issues which are slated for Board approval in May 2021, according to the straw proposal. Phase 2A issues are proposed to be implemented for RA compliance year 2023 and include the following:
• Unforced capacity evaluations
• Determining system RA requirements
• System RA showings and sufficiency testing – individual assessments
• Must offer obligations and bid insertion modifications
• UCAP for local studies
• Backstop capacity procurement – CPM modifications and availability penalty structure for RMR resources
Staff continues to recommend that CAISO Board approval not occur prior to the CPUC’s consideration and adoption of the proposed requirements, particularly as it relates to setting upfront RA requirements. This would allow for the CPUC and CAISO to stay aligned and coordinated in setting RA requirements.
Track 3B2 of the current RA proceeding (R.19-11-009) is considering larger structural changes to the RA program to address the growing reliance on variable and use limited resources and the potential market power issues associated with the falling off of a significant amount of IOU tolling arrangements.[1] A proposed decision on Track 3B2 issues is scheduled for May 2021, with a final decision in June 2021 (at the earliest). In its December 11, 2020 Revised Scoping Memo, the CPUC noted that the Track 3B2 will “[s]pecifically address the direction the Commission intends to move in with respect to larger structural changes….Set forth the necessary milestones and additional details that must be determined in order to implement the adopted direction for a compliance year no earlier than 2023.”[2]
CAISO’s UCAP proposal is currently being considered in this Track. As previously noted, Staff opposes a CAISO Board approval on UCAP requirements and individual sufficiency tests before the CPUC has vetted and adopted these requirements through its own public process. In these comments, Staff makes the following major points:
- Continues to oppose the UCAP framework but supports the change to use DQC to set NQC/UCAP values.
- Supports CAISO’s decision to exempt non-dispatchable resources from UCAP seasonal availability factors.
- Opposes minimum System RA requirements.
- Opposes an individual deficiency test for all LSEs in CAISO’s balancing authority area.
- Makes several recommendations regarding CAISO’s proposed Day-Ahead Market enhancements transition period as it relates to the removal of the real-time must offer obligation (RT MOO).
- Supports the CAISO modifying the MOO to be based on DQC only if the CPUC chooses to adopt the UCAP framework.
- Supports CAISO using its exsisting backstop authority for changes made to system requirements that would need to also be adopted by the CPUC.
- Supports the removal of the UCAP deficiency tool.
- Supports CAISO’s decision to not extend its backstop authority, at this time, to a portfolio assessment deficiency, until its portfolio assessment proposal is further developed.
- Recommends that development of CAISO’s portfolio assessment in Phase 2B be closely coordinated with any future RA structure being considered in the current RA proceeding that would set up front RA requirements to address the reliance on variable and use-limited resources in meeting resource adequacy needs.
Staff thanks the CAISO for its cooperation and coordination on the many moving pieces in this initiative that require close coordination with the CPUC.
[1] R.19-11-019 Revised Scoping Memo December 11, 2020–“ Examination of the broader RA capacity structure to address energy attributes and hourly capacity requirements, given the increasing penetration of use limited resources, greater reliance on preferred resources, rolling off of a significant amount of long-term tolling contracts held by the utilities and the material increases in energy and capacity prices experience in California over the past years.”
[2] R.19-11-009 December 11, 2020 Revised Scoping Memo
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
In prior comments regarding UCAP requirements, Staff expressed concerns with moving to a UCAP framework without addressing the impacts on existing contracts, for which payments are based on current RA value metrics and may already include payments to generators to account for forced outage replacement. The concern is that for existing contracts, CAISO’s proposal would likely increase ratepayer costs without transferring the availably incentive to generators.
To address this concern, CAISO developed an alternative (Option 1) approach. Under Option 1, CAISO would continue to derate Qualifying Capacity (QC) for deliverability. However, rather than calling it Net Qualifying Capacity (NQC), as it does today, the capacity would be called Deliverable Qualifying Capacity (DQC). The Deliverable QC would take the place of the NQC term used today. CAISO would then apply Weighted Seasonal Average Availability Factors to a resource’s DQC, which would result in the NQC for the resource. The new definition of NQC would represent the UCAP value of the resource.
In its sixth revised straw proposal, CAISO proposes to use DQC values to establish UCAP/NQC values for use in system local and flexible RA showings and assessments. Staff thanks the CAISO for attempting to address concerns associated with existing contracts. While Staff does not yet support for overall the UCAP framework, it views this change as a step in the right direction and looks forward to working in coordination with the CAISO to stay aligned in setting RA requirements for LSEs in California.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
CAISO proposes to calculate UCAP values for all resource types that do not rely on an LRA’s established Effective Load Carrying Capability (ELCC) methodology for determining Qualifying Capacity (QC) values or are non-dispatchable resources with a QC methodology that takes into account forced outages. In prior drafts, CAISO had not addressed the double accounting of forced outages for non-dispatchable resources. Staff thanks the CAISO for adjusting its UCAP proposal to acknowledge that the current CPUC QC methodology for non-dispatchable generation, which is based on historical dispatch data that considers forced outages, should not be subject to an additional derate to its NQC value.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
CAISO proposes to set minimum system requirements for all LRAs with the goal of ensuring that all LSEs are contributing to overall RA needs to serve load in CAISO’s BAA. CAISO notes that it “has observed some LRAs are setting unusually low requirements...” and concludes that that “it is necessary and appropriate to set a minimum system RA obligation to avoid LRA leaning and ensure LRAs meet a minimum equitable level of reliability.”
Staff first thanks the CAISO for trying to address any leaning issues that may exist between LRAs in CAISO’s BAA. However, in its proposal, CAISO has failed to provide any data that supports the magnitude of this leaning. As documented in the Root Cause Analysis:
CPUC jurisdictional LSEs comprise approximately 91% of the total load. Per the CPUC’s RA program requirements, a 15% PRM is added to the peak of the 1-in-2 forecast for a total obligation of 46,656 MW. The non-CPUC local regulatory authorities vary slightly in their PRM requirements but collectively yield a 14% PRM for a total obligation of 4,758 MW. About 500 MW or about 1% of the total load uses a PRM less than 15%. In total, across both CPUC-jurisdictional and non-jurisdictional entities, the PRM is 14.9% and the obligation for August 2020 was 51,413 MW.”[1]
CAISO’s current proposal is to set minimum requirements based on a 1-in-5 weather year peak forecast plus a 6% adder to account for operating reserves. CAISO notes that LRAs may set their own RA requirements that exceed this minimum threshold. While CAISO’s minimum requirements today may seem appropriate, adopting such a proposal will thwart the CPUC’s ability to change these requirements in the future if it sees fit. Staff notes that a minimum LRA requirement would go into CAISO tariff and would remove the current deference provided to LRAs in setting their own reliability obligations. Once this deference is removed there could be potential conflicts downstream regarding appropriate reliability levels and counting metrics for resource adequacy that would no longer have to be vetted by the CPUC through its processes.
Staff is concerned that setting a minimum LSE/LRA system RA requirement interferes with the CPUC’s authority to set its own requirements under state law. PUC Code 380 clearly specifies that the CPUC, in coordination with the CAISO, will set resource adequacy requirements for its jurisdictional LSEs. Staffs views CAISO’s minimum system RA requirements as interfering with the CPUC’s responsibility to set these requirements consistent with state law.
As an alternative, CAISO should modify its proposal to set minimum system RA requirements in coordination (or consistent) with the CPUC, given that the CPUC represents 91% of load in CAISO’s BAA. This will allow the CPUC to still retain its jurisdiction but would also address the leaning issue CAISO is trying to address. Additionally, this approach would ensure that that any changes to minimum requirements be vetted and approved by the CPUC (or whichever LRA represents the majority of peak load in CAISO’s BAA, if this were to change in the future) before the minimum requirements are adopted in the CAISO tariff.
While there is value in ensuring that CAISO LRAs are not leaning on other LRAs with more stringent RA requirements, the value of doing so may result in potential consequences downstream that may not counterbalance the benefit of reduced leaning. Therefore, Staff is opposed to such a requirement unless amended in the manner recommended above.
[1] Final-Root-Cause-Analysis-Mid-August-2020-Extreme-Heat-Wave.pdf (caiso.com) at 41
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
CAISO continues to propose that it preform an individual deficiency test for all LSEs in its BAA and a portfolio deficiency test for each RA compliance month. Staff does not support either of these tests for several reasons.
First, with regard to the individual deficiency test, Staff cannot support such a requirement until the CPUC adopts the same UCAP requirement framework through its own processes. Having two sets of RA requirements (one set by the LRA and one set by the CAISO) does not make any sense for ratepayers. Second, CAISO currently does not have authority over LSEs to issue system deficiency notices. The CPUC runs an RA compliance program which refers potential violations to its enforcement division. It is through this compliance program that the CPUC issues deficiency notices and cure periods for its jurisdictional LSEs. Regarding RA demonstration compliance, CAISO’s tariff (section 40.7), specifically provides deference to the LRA in determining whether an LSE has cured a system deficiency.
Section 40.7 states that:
[f]or all other identified deficiencies, other than an insufficiency identified through Phase 2 of the Local Capacity Area Resource sufficiency evaluation, at least 30 days prior to the effective month of the relevant Resource Adequacy Plan, the Scheduling Coordinator for the Load Serving Entity shall:
- demonstrate that the identified deficiency is cured by submitting a revised Resource Adequacy Plan; or
- advise the CAISO that the CPUC, Local Regulatory Authority, or federal agency, as appropriate, has determined that no deficiency exists.
If, after providing any needed opportunity to resolve identified discrepancies as required by Section 40.7(b), the CAISO identifies an insufficiency through Phase 2 of the Local Capacity Area Resource sufficiency evaluation, then the CAISO may notify the relevant Local Regulatory Authority of the insufficiency.
(b) In the case of a discrepancy between Resource Adequacy Plan(s) and Supply Plan(s), if resolved, the relevant Scheduling Coordinator(s) must provide the CAISO with revised Resource Adequacy Plan(s) or Supply Plans, as applicable, at least 30 days prior to the effective month. If the CAISO is not advised that the deficiency or discrepancy is resolved at least 30 days prior to the effective month, the CAISO will use the information contained in the Supply Plan to set the obligations of Resource Adequacy Resources under this Section 40 and/or to assign any costs incurred under this Section 40 and Section 43A.
Staff views the proposed individual LSE deficiency test as removing the current deference provided to the LRA’s/CPUC’s RA compliance program. Approval of such a proposal would result in the tariff changes to remove deference to the LRA’s RA program (provided above). This could become problematic if the CPUC deems an LSE as compliant in meeting its own RA requirements, but CAISO deems that same LSE deficient. Similar to Staff’s comments in Section 5 regarding minimum system (LRA) requirements, Staff sees potential future problems in changing the CAISO tariff to remove the CPUC’s ability to set its own RA requirements. Staff, therefore, does not support this aspect of the proposal.
Regarding the portfolio sufficiency test, Staff reiterates its prior concerns that any portfolio assessment which would result in CPM backstop designations be coordinated with the CPUC so that upfront RA requirements can mirror, to the greatest extent possible, backstop decisions. Staff thanks the CAISO for pushing the portfolio sufficiently assessment proposals to Phase 2B, which will allow the CAISO more time to develop the necessary details of its proposal. However, Staff still believes that any stochastic portfolio assessment should be used to set upfront requirements rather than backstop to these requirements. Setting RA requirements is a planning function and therefore backstopping to these requirements should mirror the upfront requirements to the greatest extent possible.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
The CAISO proposes the following must offer obligation and bid insertion modifications in this initiative:
- Must offer obligations (MOO) must be set at the amount of DQC shown for RA, not the amount of UCAP/NQC shown;
- Resources have a 24 by 7 must offer obligation into the day-ahead (DA) market, and real-time (RT) market through the day-ahead market enhancements transition period, unless exempt, and;
- Resources will receive bid insertion, unless exempt.
In prior straw proposals, CAISO had proposed to eliminate the RT MOO for RA resources that do not clear the DA market. Staff has opposed this aspect of the proposal, noting that removal of the RT MOO is largely dependent on the enhancements being developed in CAISO’s Day Ahead Market Enhancement (DAME) initiative. These DA market enhancements should be tested before removing the RT MOO obligation for RA resources. In this iteration of its proposal, CAISO has modified its proposal to retain the RT MOO until the end of a transition period proposed in the DAME initiative. CAISO states that the rationale for a transition period is that it will allow CAISO to observe how the proposed framework works.
According to the example CAISO provided, the transition period would end on January 1, 2024. Staff continues to have numerous questions related to DAME and its interaction with the resource adequacy program. Staff plans to provide future comments on this topic as more details are developed. Staff also recommends that rather than having a transition period, CAISO should evaluate the market after the initial period and then decide on whether and how to move forward with removal of the RT MOO. Finally, Staff notes that a fifteen-month transition (Fall 2022 -Jan. 1, 2024) period may not provide enough time to evaluate lessons learned and allow sufficient time to renegotiate RA contracts, if that is even the direction that CAISO intends to move.
CAISO also proposes to set the MOO based on the amount of DQC rather than NQC to accommodate changes that it has made to the UCAP requirement section of its proposal. Staff is supportive of modifying the MOO to be based on DQC, but only if the CPUC adopts the UCAP framework.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
No comments at this time.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
No comments at this time.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
CAISO has made several changes to its straw proposal regarding its backstop procurement mechanism. These changes include clarifying the use of its existing system backstop authority for UCAP/NQC, elimination of its UCAP deficiency tool and noting that backstop for the portfolio analysis will be pursued with the further development of its portfolio analysis proposal.
Staff thanks the CAISO for making these changes to its proposal. Staff particularly supports the CAISO using its existing backstop authority for changes made to system requirements that would need to also be adopted by the CPUC. Additionally, Staff supports the removal of the UCAP deficiency tool given that the tool would be duplicative to the incentives already in place under the CPUC’s RA compliance program (which address leaning). Finally, Staff supports the CAISO decision to not extend its backstop authority to a portfolio assessment deficiency until its portfolio assessment proposal is further developed.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
CAISO clarifies how it would use its existing backstop authority to make UCAP/NQC designations. Specifically, CAISO clarifies that, like today, it would only seek a system backstop designation if LSEs’ aggregate RA filings were deficient in meeting the system requirements. Staff appreciates this clarification and agrees that if system requirements are modified to be based on a UCAP structure, then CAISO would and should have the ability to use its current backstop authority to make a system UCAP/NQC designation and allocate the costs first to LSEs that were deficient in meeting their system RA obligations. Staff, however, notes that it only supports system backstop to a UCAP /NQC structure if the CPUC adopts the UCAP RA structure currently be considered in Track 3B2 of the R.19-11-009.
Staff also points to its comments in Section 5, regarding minimum system requirements.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
See comments in Section 6.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
As part of this initiative, CAISO recognizes that removal of the current RA availability mechanism (RAAIM), will need to be replaced with a penalty structure for RMR resources to ensure that these resources are meeting their reliability obligations. Therefore, the CAISO is proposing a simplified availability penalty structure (APS) for RMR resources that builds off the current RAAIM structure to address some of the unique characteristics of RMR resources. The APS would set the availably target at 94.5% for each month and would assess RMR resources on a 24x7 basis based on their monthly submitted bids. The penalty price would be set at the RMR fixed monthly price and this would be credited back to LSEs paying the full cost of service for the resource.
Staff agrees that if the UCAP structure is adopted and RAAIM is eliminated there will need to be some type of availability penalty mechanism to be applied to RMR resources, since these resources are being paid their full cost of service to be available for reliability. Staff also agrees that the mechanism should only be a penalty mechanism rather than the current RAAIM mechanism which provides both a penalty and an incentive payment. Incentive payments should not be paid to resources that are already recovering their full cost of service.
Currently RMR resources are subject to RAAIM and planned outages are considered exempt from counting in the assessment of RAAIM penalties. RMR resources also are not subject to bid insertion. Under the proposed APS, RMR resources would be assessed based on bids regardless of whether the outage was a planned or forced outage. Because of this, CAISO states that “it is contemplating modifying existing RMR contract provisions so they can be utilized to cover lost daily fixed cost revenues associated with major maintenance outages that may impact the resource’s ability to meet the 94.5% target.”
As an alternative, Staff recommends that CAISO establish bid insertion for RMR resources based on inputs identified in each RMR contract and exempt planned outages from the APS assessment. Bid insertion would ensure that the RMR resources are bidding into CAISO’s markets consistent with their contracts, and exempting planned outages from the APS assessment would ensure that RMR resources are not penalized for taking planned major maintenance outages.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
To date, CAISO has not submitted its portfolio assessment proposal into the CPUC RA proceeding for consideration. Staff believes that it is critical to align capacity backstop decisions with up front RA requirement. Currently, the CPUC is evaluating what changes to the RA program will be necessary to accommodate energy and use limited resources. Development of CAISO’s portfolio assessment should be closely coordinated with any future RA structure that seeks to address the reliance on variable and use-limited resources in meeting resource adequacy needs.
Also see comments in Section 6 relate as they relate to CAISO’s portfolio assessment.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Calpine
Submitted 01/29/2021, 04:46 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Calpine offers limited comments on two core aspects of Phase 2A of the proposal: UCAP and minimum system RA requirements. Calpine continues to highlight that UCAP in and of itself may be insufficient to encourage the performance of RA resources. In addition, while Calpine supports the general idea of minimum system RA requirements, Calpine would like a stronger analytical foundation for the specific requirements that the CAISO has proposed, or any other requirements that are ultimately implemented.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Support with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Under a UCAP structure, forced outages impact how much RA capacity can be sold prospectively from a resource, thus the CAISO argues that UCAP may provide incentives for suppliers to minimize forced outages. While Calpine does not necessarily disagree with this justification for the proposal, because the CAISO’s proposal would assess outage performance over a relatively broad set of hours, it is unclear to Calpine that the CAISO’s proposal actually would encourage better outage performance in the hours that matter most from a reliability perspective. (Calpine agrees with stakeholders who have pointed out that the low RA supply cushion hours during which the CAISO proposes to measure UCAP, do not actually reflect the “tightest” hours because they are defined without reference to the availability of non-RA resources.) The CAISO should continue to explore other means of encouraging resource performance, including better scarcity pricing and/or stronger direct performance incentives, such as New England’s Pay-for-Performance and PJM’s Capacity Performance incentives.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
Calpine generally supports the CAISO establishing minimum system RA requirements, but Calpine believes that the “bottom up” approach proposed by the CAISO has not been fully justified. The CAISO should perform or cite a study that demonstrates that the CAISO’s proposed 6% planning reserve margin applied to a 1-in-5 load forecast yields a specific reliability level. Further, to the extent that CAISO utilizes a bottom up approach, Calpine would appreciate an explanation of how and whether regulation up is covered by the proposed requirements. In addition, while it is not an explicit part of the RA Enhancements proposal, Calpine is concerned about the ad hoc application of the same planning reserve margin to derive both peak and net peak capacity requirements, as the CAISO has proposed in R.20-11-003. While the CAISO might be able to argue that the bottom up approach applied to the peak is roughly consistent with PRMs derived from rigorous reliability studies, it can draw no such link with respect to the application of the same planning reserve margin to both the peak and the net peak. Further, the CAISO’s proposals have not addressed resource counting with respect to separate peak and net peak requirements, e.g., current solar ELCCs reflect solar’s ability to meet the peak and shift the net peak later, but also its inferior performance at the net peak. With separate peak and net peak requirements, it might be appropriate to count solar more fully towards the peak but not at all towards the net peak requirement.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
City and County of San Francisco (CCSF)
Submitted 01/29/2021, 03:43 pm
Submitted on behalf of
City and County of San Francisco (CCSF)
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
The City and County of San Francisco (CCSF) is making limited comments on aspects of CAISO's sixth revised straw proposal Section 6.1.1 related to UCAP that should be modified to address Transmission Ownership Rights and Local Regulatory Authority jurisdictional issues. In particular,
- CAISO should modify the UCAP exemption for transmission outages to apply also to Transmission Ownership Rights, since CAISO has the same visibility to, and authority to approve, transmission outages for these facilities as it does over the CAISO Controlled Grid transmission facilities.
- CAISO should not include in its proposal that it will not accept a Qualifying Capacity (QC) value for a resource that is more than 10% greater than the lowest QC value adopted by any other Local Regulatory Authority (LRA) for the same resource ID. Instead, CAISO should work with LRAs if there are specific instances of different QC values being used for the same resource ID that are creating significant identifiable impacts on the actual physical resources available to CAISO.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
CAISO proposes to exclude generation outages from the UCAP calculation that are due to transmission outages on the CAISO Controlled Grid. CCSF agrees that it is reasonable to include this type of exemption, but this approach fails to recognize that there are generators that are connected to transmission facilities that are not part of the CAISO Controlled Grid that could be affected by similar transmission outages that also should receive an exemption. In particular, CCSF’s Hetch Hetchy transmission facilities are subject to the same NERC mandatory reliability standards as are the CAISO Controlled Grid facilities. Further, CAISO has recently filed at FERC amendments to the operating agreement between CCSF and CAISO under which CCSF coordinates maintenance outages and forced outages with CAISO following the same tariff requirements that are applicable to the Participating Transmission Owners (i.e., CAISO Tariff Sections 9.3.6 Maintenance Outage Planning and 9.3.10 Forced Outages).[1] CAISO thus has the same visibility to, and authority to approve, outages on the HHWP transmission system as it does over the CAISO Controlled Grid transmission facilities. For these reasons, CCSF suggests that CAISO modify the UCAP exemption for transmission outages to apply also to Transmission Ownership Rights.
CCSF also is concerned about potential issues that could arise due to CAISO’s proposal to not accept a Qualifying Capacity (QC) value for a resource that is more than 10% greater than the lowest QC value adopted by any other Local Regulatory Authority (LRA) for the same resource ID. This is a significant departure from CAISO’s current practice, which is to use the greatest QC value adopted for a particular resource ID. CCSF has applied its adopted QC methodology for its HHWP hydroelectric generation using a conservative approach that takes into consideration historical water availability and HHWP’s maintenance practices that affect reservoir levels and unit availability during certain months of the year. This methodology is not the same as the California Public Utilities Commission's (CPUC) methodology and therefore could produce different results for different months from the CPUC’s methodology. CAISO’s proposed approach effectively removes from each LRA the authority to adopt its own resource counting methodology and cedes that authority to whichever LRA has the most conservative methodology. If any single LRA were to adopt an extremely conservative methodology applicable to any resource type, all LRAs would be bound to the results of that methodology for any applicable resource. For example, an LRA that adopted a QC of 50% for gas-fired resources instead of 100%, could unilaterally remove half of the gas-fired resource RA capacity from the RA supply pool. CCSF urges CAISO to remove this element of the proposal and to work with LRAs if there are specific instances of different QC values being used for the same resource ID that are creating significant identifiable impacts on the actual physical resources available to CAISO.
[1] https://elibrary.ferc.gov/eLibrary/filelist?document_id=14923651&optimized=false
“4.3.5 Outage Coordination. CAISO, as the Balancing Authority, and CCSF, through its Transmission Operator, shall coordinate outages in accordance with Applicable NERC/WECC Reliability Requirements and CAISO Tariff Sections 9.3.6 and 9.3.10. CAISO and CCSF, through its Transmission Operator, will provide Outage information for the Hetch Hetchy bulk electric system facilities, Outages affecting the CCSF-PG&E Interconnection (as set forth in section 10.2 of the CCSF-PG&E Transmission Interconnection Agreement), the Standiford Interconnection or the Oakdale Interconnection in accordance with the mechanisms and timing required for transmission facilities in CAISO Tariff Section 9.3.6, Maintenance Outages, and CAISO Tariff Section 9.3.10, Forced Outages. CAISO will approve the Outages in accordance with the terms in the same CAISO Tariff Sections.”
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
EDF-Renewables
Submitted 01/29/2021, 03:45 pm
Submitted on behalf of
EDF-Renewables
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
No position
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
EDF-R appreciates CAISO’s move to exclude outages in the UCAP calculation if they are caused by force majeure or by a failure or outage on transmission equipment or associated facilities that are a part of the CAISO Controlled Grid. That said, EDF-R is concerned that the policy does not provide distribution connected resources (resources connecting under the WDAT tariff, participating in CAISO wholesale markets, and provide Resource Adequacy) the same treatment as transmission connected resources (connecting under the CAISO tariff) when it comes to excluding outages caused by transmission equipment or associated facilities beyond the generator’s control. Appreciating that the reporting requirements for outages at the transmission level verses the distribution level are very different, the CAISO could include in its proposal outage exemption where distribution connected generator have the opportunity to submit evidence showing their outage was aligned with and related to the distribution system outage. Looking at SCE’s 2019 Transmission Availability Report as an example, it appears that lines 69kV and below are on outage more frequently than higher voltage transmission.
EDF-R appreciates that the CAISO is no longer proposing unique UCAP counting methodologies for storage resources.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
EDF-R supports the simplifications from previous proposal iterations, applying the proposal equitably, and request that the CAISO provide a redline of table 7.1.1 in the BPM for Reliability Requirements in the next proposal iteration. This framework would facilitate understanding how the must offer obligations will be changed by each policy (RA 2022, RA 2023, Pre-Dame, Post DAME, etc.). In the same regard, it may make the most sense, in terms of reducing complication, for the CAISO to tie the implementation of RA changes with the imbalance reserves product contemplated in DAME.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
LSA and SEIA
Submitted 01/29/2021, 04:59 pm
Submitted on behalf of
Large-scale Solar Association (LSA)
Solar Energy Industries Association (SEIA)
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
LSA and SEIA offer the comments summarized below on the CAISO’s RA Enhancements, Phase 2A proposals.
- UCAP definitions: LSA and SEIA strongly oppose the proposed definition changes as an unwarranted interference with LSE-supplier Power Purchase Agreements (PPAs). These comments provide an example of the duplicative impacts of this proposal on numerous contracts already executed or in late-stage negotiations, to help the CAISO understand the nature and extent of the problem its proposals would create. This is one of the most serious problems in the Proposal and is likely to lead to challenge of the CAISO’s proposals at FERC.
- Distribution-caused outages: Counting generator outages caused by distribution-system problems against UCAP would be unduly discriminatory, because these projects are similarly situated to transmission-connected generators and import resources with firm transmission.
- Urgent Outages: The CAISO should clarify that these outages will only count against UCAP if the CAISO approves the outage and the equipment actually goes out of service.
- Maximum QC values: This proposal has been framed by the CAISO in terms of “consistency” and “reducing confusion,” but CAISO should address several issues raised by stakeholders.
- VER-storage Hybrid Resource UCAP: There are many problems with the proposed methodology, which could result in UCAP values below Co-located Resource UCAP values with the exact same Forced Outage performance. Counting unavailability reported through the Dynamic Limit Tool against UCAP is particularly problematic. Other approaches should be considered that do not suffer from these flaws.
- UCAP for QFs: The CAISO is proposing an “alternative performance-based UCAP determination” for Demand Response (DR) and Qualifying Facilities (QFs). CAISO would set the UCAP based on evaluate compliance with Dispatch Instructions over the prior 3 years when these resources received market awards. The CAISO should allow wind/solar QF resources to choose a UCAP determination based on the methodology for other wind/solar resources [i.e., ELCC-based QC and DQC], at their option.
- Minimum System RA Requirements: The CAISO should release the RA requirements (and details, like any associated credits and resource counting rules) of all LRAs, once it has verified that such a release would not violate confidentiality requirements.
- Planned Outage Pool (Phase 2B): Consistent with their support of an enhanced Bulletin Board for available substitute capacity in Phase 1, LSA and SEIA support the concept of a Planned Outage Pool for this purpose.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
The main problems are with the UCAP definitions and the Hybrid Resources UCAP formulation.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
LSA and SEIA strongly oppose the CAISO’s proposed redefinition of:
- NQC as “Deliverable QC;” and
This change – a complete reversal from the CAISO’s earlier, logical proposal to create a separate UCAP definition and requirement – constitutes unacceptable CAISO interference in freely negotiated Power Purchase Agreements (PPAs) in a way that benefits one contract party at the expense of the other and does not properly consider the other contract elements.
As the CAISO itself said earlier, the proposal will cause great confusion (see, e.g., the frequent use of “NQC/UCAP” throughout the Proposal) and require significant changes throughout the tariff, BPMs, and Operating Procedures. The CAISO is apparently willing to cause this tremendous confusion by changing a very long-standing tariff definition (over a decade) in a misguided effort to help reduce LSE costs (payments to suppliers) under the new framework, perhaps in an effort to gain their support for the new framework.
This change was proposed by certain Load-Serving Entities (LSEs) with numerous RA contracts providing payment to suppliers per MW of “NQC,” in order to short-circuit the normal contract renegotiation process. The LSEs executed such contracts in the belief that they would be sufficient to meet their RA obligations. Now that each contract may be worth less toward the new UCAP requirements, they have a serious case of “buyer’s remorse” and want to pay each supplier less, perhaps so they have resources to sign up more capacity to meet the new requirements.
This reasoning is flawed, because it is not clear whether the new requirements will require LSEs to procure much, if any, new capacity. While each resource would count for less UCAP than (current) NQC, the removal of Forced Outages from the Planning Reserve Margin (PRM) should lower RA Requirements, i.e., at least partly cancel out the lower per-MW UCAP value. This will result in windfall for LSEs, which will be able to lower their RA payments, perhaps without any requirement to spend the savings on new capacity.
Suppliers with such contracts, by contrast, will simply lose. Most of these contracts already have stringent availability requirements and guarantees that highly incent them to be available and penalize them for forced outages that exceed a certain level. Under the CAISO proposal, they would be penalized a second time for the same Forced Outages through lower contract payments.
In the absence of CAISO interference, it might make sense for the parties to renegotiate the contract to remove or lower availability penalties and base the payment on MW of UCAP instead of MW of NQC. Alternatively, LSEs might leave contracts alone where they are satisfied that the existing contract incentives and penalties will result in a high UCAP values for those resources.
The CAISO’s proposed change undermines this natural adjustment process by awarding LSEs their contract-payment reduction without removing the availability penalties. That removes any incentive on the part of the LSEs to renegotiate fair and compensating changes. It is simply wrong for the CAISO to take such actions to benefit the LSEs without regard to the impact on suppliers.
These issues are illustrated with the general example below.
Assumptions: 100 MW 4-hour energy storage resource
Contract payment based on $/MW of (current) NQC
98% availability guarantee, pro rata contract penalty for lower availability
96% actual availability (4% Forced Outage rate)
- Under the current structure, due to the 4% Forced Outage rate:
- The contract MW (and payments) would be reduced by 2% (2 MW) for the difference between the 98% availability (98 MW) guarantee and the 96% (96 MW) actual availability (2 MW difference; and
- There would be no RAAIM penalty, since availability is greater than 94.5% (the current 96% Availability Standard less 2% deadband).
- Under the new structure (including the proposed NQC re-definition), due to the 4% Forced Outage rate:
- The contract MW (and payment) payment would be reduced by 4% (4 MW) for the lower (new) NQC/UCAP of 96 MW, to reflect the difference between 100% availability and the 96% actual availability; and
- The contract MW (and payment) would be reduced by 2% (2 MW) for the difference between the 98% availability (98 MW) guarantee and the 96% (96 MW) actual availability, as before.
So, the project payments would be reduced 6% (6 MW) for a 4% Forced Outage rate (only 2% different than the agreed-on benchmark level), because part of the 4-MW UCAP reduction duplicates the 2% (2 MW) availability penalty. In other words, solely due to CAISO’s NQC re-definition, the resource would be penalized twice for the same Forced Outages, and the LSE has no incentive to negotiate to remove the double penalty.
It seems fair to either leave the NQC definition as assumed in the negotiations and apply the penalties as negotiated, or use the NQC definition but eliminate the PPA availability performance penalties. If the CAISO had stuck to its prior position, the parties could have renegotiated the contract to do that. The CAISO’s new position just transforms the contract in the most disadvantageous manner for the supplier, i.e., the off-taker has no incentive to negotiate.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
LSA and SEIA offer comments below in two areas: the proposed UCAP framework overall, and the proposed UCAP calculation for individual resources.
Comments on UCAP framework
- Distribution-caused outages should not count against UCAP. The CAISO is proposing that generator outages/de-rates caused by CAISO grid transmission problems (inside-CAISO generators) or import transmission systems (imports with firm transmission) would not count against UCAP, but outages/de-rates caused by distribution-system problems would.
At the meeting, CAISO defended this proposal by saying it has no way to validate whether unit de-rates/outages were really caused by distribution-system problems without manually checking each claim. CAISO knows about its own system problems, and it has “regular communications” with neighboring transmission systems and so would be aware of issues there.
CAISO claimed that the time before 2023 UCAP implementation would not be sufficient to establish the necessary communication and validation protocols with distribution-system providers to extend the UCAP impact exemption to distribution-system problems.
LSA and SEIA maintain that these are not sufficient justifications for the CAISO’s position, for the reasons described below.
- Undue discrimination: Distribution-connected generators are similarly situated to transmission-connected generators and imports with firm transmission, i.e., suppliers have no control of the subject facilities and, therefore, UCAP availability incentives would have no impact. Suppliers have no more control over distribution lines than they do over CAISO or import transmission lines.
- Operational reliability: CAISO needs to know about distribution-system problems causing generation de-rates or outages, since those problems could impact grid flows. LSA and SEIA find it difficult to believe that there is no communication between UDCs and the CAISO for even significant distribution-system problems.
- Existing contractual provisions: The CAISO already has contractual relationships with Utility Distribution Companies (UDCs) through UDC Operating Agreements (UDCOAs). This agreement provides, among other things, for joint CAISO-UDC development of “any necessary forms and procedures for collection, study and transmittal of system data, information, reports, and forecasts.” (Pro forma UDCOA Information Sheet, Schedule 11). The agreements also call for CAISO-UDC coordination and information sharing for maintenance outages, emergencies, etc. (CAISO Tariff Appendix B.8, Section 4).
The two years before UCAP implementation certainly seems like sufficient time for the CAISO and UDCs to develop any additional protocols needed under their already-existing agreements to allow distribution-connected projects the same treatment as transmission-connected projects and firm import resources with respect to UCAP.
- Urgent Outages: The CAISO should clarify that these outages will only count against UCAP if the equipment actually goes out of service, even if the CAISO approves the outage.
- Maximum QC values: This proposal has been framed by the CAISO in terms of "consistency" and "reducing confusion," but several issues were raised by meeting attendees that the CAISO should address.
- How serious an issue is this, i.e., how often are Generating Facilities subject to two different LRA jurisdictions? If this is a rare problem, changing the current practice would not be worth the hassle of making the change.
- CAISO assignment of a lower QC value to a resource than the jurisdictional LRA would leave the LSE in a difficult position. That could require, for example, submittal of different RA Plans to CAISO and the LRA, and/or greater procurement by the LSE to meet CAISO standards than the LRA has authorized.
Comments on UCAP calculation for individual resources
- VER-storage Hybrid Resource UCAP formula generally: There are many problems with the proposed methodology, which could result in UCAP values below those for Co-located Resources with the exact same Forced Outage performance. Counting unavailability reported through the Dynamic Limit tool is particularly problematic.
- The ELCC value for the VER component already reflects forced outages, VER resource variability, and use of on-site VER generation to charge storage capacity, so there is no justification for valuing the VER component at less than the DQC/NQC. Reducing the resource NQC/UCAP in any way below that level based on VER capacity forced outages, variability, or unavailability when charging storage would be both double-counting and contrary to the LRA decision on the value of that resource, even if CAISO arrives at that result using Pmax or other formulae.
- There should be no UCAP penalty if the resource meets the MOO and complies with Dispatch Instructions based on resulting schedules. Because there is so much more capacity behind the meter than for other resources, Hybrid Resources might very well be able to meet the MOO and resulting schedule even with a Forced Outage (de-rate) or reduced availability reported via the Dynamic Limit (DL) Tool.
- Dynamic Limits are not Forced Outages and should not be treated as such.
- Natural VER variability is not a Forced Outage. Valuing the VER component at less than the ELCC value double-counts /under-values the resource (see above).
- VER production charging storage is not a Forced Outage, and it does not reduce the total generating capability available to the CAISO. In order for the storage component to be available to the CAISO, it must be charged, and the resource operator would likely be charging the storage at the same time as grid energy would have been dispatched by the CAISO to do the same thing, i.e., when VER production is high and energy prices low.
- The CAISO does not appear to have considered other, more reasonable options suggested by stakeholders that would not count Dynamic Limits against UCAP. These potential approaches include LSA/SEIA's proposal to: (1) Set the VER component UCAP at ELCC; (2) the set storage component UCAP in the same manner as stand-alone storage (reflecting physical outage cards); and (3) add the two UCAP values but limit the sum to the POI capacity (to avoid the math issues that seem to be concerning the CAISO).
This method would require revising outage reports so Hybrid Resources could differentiate in their outage reporting between solar and storage capacity. If necessary, the CAISO could use the required telemeter data for VER output and storage State of Charge to verify that the reported outage was for the reported VER or storage capacity.
This is the only method that would maintain parity between Hybrid and Co-located Resources.
- UCAP for QFs: The CAISO is proposing an “alternative performance-based UCAP determination” for Demand Response (DR) and Qualifying Facilities (QFs). CAISO would evaluate compliance with Dispatch Instructions over the prior 3 years when they received market awards to set the UCAP. The CAISO said in the meeting that it might consider whether QFs that are also wind/solar resources might be allowed to choose a UCAP determination based the methodology for other wind/solar resources [i.e., ELCC-based QC and DQC]. LSA and SEIA urge the CAISO to provide that choice.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
The CAISO should release the RA requirements (and details, like any associated credits and resource counting rules) of all LRAs, once it has verified that such a release would not violate confidentiality requirements. Publication of this information would illuminate significant disparities and perhaps encourage LRA with weaker requirements to strengthen them, separate from any CAISO requirements to do so.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
LSA and SEIA have no comment at this time.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
LSA and SEIA’s comments in this area focus on two topics - charging restrictions applicable to storage resources on the SCE distribution system, and general concerns about the ability of Mixed-Fuel Resource (MFR) owners to control charging from the CAISO grid.
Charging restrictions applicable to SCE distribution-system storage resources
This is an emerging issue, raised in the meeting by CESA (California Energy Storage Association) at the January 15th stakeholder meeting.
Many storage resources seeking interconnection on SCE’s distribution system (which can go up to 115 kV generally) in at least some areas will be given charging restrictions in some hours that they are not to exceed (or risk SCE “opening the breaker”). These charging limitations are provided on a year-ahead basis assuming “N-1” conditions.
Since the CAISO proposal requires storage to bid the entire positive and negative range, there seems to be a conflict, completely outside the control of the affected resources. As CESA stated, this problem could impact “hundreds of MWs needed for local reliability.”
The CAISO did not seem familiar with this issue but stated that UCAP would be affected if the full physical capability is not made available due to contract limitations. In other words, the resources would have to manage their bid strategies to try and ensure that the resource doesn’t clear the market in the range where SCE instructions limit charging.
This is not a satisfactory response. The resources clearly can’t offer their full operating range knowing that SCE will restrict their charging activity without violating CAISO rules, since some of the range will not be available. However, if they don’t, the CAISO says it will insert bids for the difference between the DQC and the offered amount; that additional capacity can’t be delivered due to SCE charging limitations.
The CAISO and SCE must address this issue. SCE is presumably counting on those MWs, and it is unreasonable to expect suppliers to navigate these conflicting rules.
Ability of MFR owners to control grid charging
The proposed rules, including the proposed Must-Offer Obligation and bid-insertion requirements, continues the CAISO’s dismissal of concerns related to Investment Tax Credit (ITC) recovery, e.g.: (1) PPAs already executed, or in advanced negotiations, that would prohibit grid charging; and (2) potential financing/cost and other problems that could arise with inability of resource owners to limit gid charging.
Lack of ability to control grid charging during the ITC recovery period could raise costs to ratepayers (since ITC recovery could be impaired) and/or lead to disfunctions like resource designs that physically prevent grid charging (to avoid mandatory bids for storage charging capability). LSA and SEIA believe that the CAISO has not given sufficient consideration to these problems, or to potential solutions such as those suggested in ACP-California comments, e.g., grandfathering of executed or advanced-stage contracts and/or limiting Hybrid Resource and Co-located storage MOOs to discharge capability only. LSA and SEIA strongly urge the CAISO to reconsider its approach, to avoid undermining federal policy and MFR commercial realities.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
LSA and SEIA have no comment at this time.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
LSA and SEIA have no comment at this time.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
LSA and SEIA have no comment at this time.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
LSA and SEIA have no comment at this time.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
LSA and SEIA have no comment at this time.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
LSA and SEIA have no comment at this time.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
LSA and SEIA support the Planned Outage pool to eliminate Forced Outage substitution requirements; they have no comment on the remaining issues.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Metropolitan Water District of Southern California
Submitted 01/29/2021, 10:48 am
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
Metropolitan opposes the CAISO proposal to exclude resource type from non-dynamic resource specific resources and increasing the reserve requirement on Local Regulatory Authorities unless modifications are made to these two proposals.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Metropolitan proposes an additional attestation process in certain limited instances to enable fuel type specific UCAP treatment of non-dynamic resource specific resources. Under its current UCAP proposal, the CAISO would only attribute a generation resource’s fuel type UCAP to imports that are dynamic or pseudo-tied to the CAISO’s Balancing Authority Area. All non-dynamic resource specific resources that are imported would be treated the same when applying the UCAP methodology (e.g., a non-dynamic hydroelectric resource would be treated like a non-dynamic fossil fuel resource for UCAP purposes). The proposal results in disparate treatment between on- and off-system resources of the same fuel type.
In cases where a single resource of known fuel type is the only resource in a Scheduling Coordinator’s import portfolio from year-to-year, the CAISO should permit an annual attestation as to the fuel type which is then used to determine the applicable UCAP for non-dynamic resource specific resources. Once the resource and fuel type have been initially attested to, the Scheduling Coordinator could provide an attestation on a yearly basis specifying that the non-dynamic resource specific resource neither changed the underlying specific resource or fuel type from the prior year. In comments on the Draft Final Proposal submitted last week, Metropolitan proposed a similar attestation process for non-dynamic resource specific RA imports to receive Must Offer Obligation treatment specific to the resource type.
When discussing resource-specific treatment of imports in its bidding requirement proposal, the CAISO said that imports “need to be pseudo-tied or dynamically scheduled to the CAISO” if they want resource specific treatment.[1] Metropolitan assumes the CAISO would make a similar argument here for resource specific UCAPs. However, there are cases when hydroelectric non-dynamic resource specific resources are limited to day-ahead static schedules and are unable to provide the attributes associated with dynamic generation resources (e.g., five-minute dispatch, ancillary services, etc.). This illustrates that an operational need can exist to be a non-dynamic resource specific resource, yet the operational need is unrelated to the willingness or ability of the resources to make transparent its technology specifications. Where a single non-dynamic resource specific resource type comprises a Scheduling Coordinator’s import portfolio, the CAISO should accept attestation of the resource type to allow the resource to apply its fuel type UCAP.
Separately, Metropolitan agrees with the CAISO that curtailment on firm transmission should not be counted towards a resource’s UCAP determination.
[1] Resource Adequacy Enhancements, Draft Final Proposal and Sixth Revised Straw Proposal, Dec. 21, 2020, at p. 59.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
Metropolitan previously submitted comments[1] on the CAISO’s proposal that the planning reserve standards must be uniform across all entities within the CAISO footprint and the CAISO’s conclusion that it is neither possible nor desirable for Local Regulatory Authorities (LRAs) to establish different planning reserve standards. In the sixth version of the revised straw proposal, the CAISO replaces the planning reserve margin construct with UCAP, system operating reserves and forecasted peak load. The CAISO now proposes a minimum system UCAP requirement that is six percent above the California Energy Commission’s 1-in-5 forecasted peak load.
Metropolitan’s Colorado River Aqueduct System (CRA System) is unique within California, and its LRA’s resource adequacy program was designed to establish targets that maintain reliability while recognizing the unique features of its system. Metropolitan requests that the CAISO establish a mechanism to allow LRAs to demonstrate the reasonableness of their RA program requirements if they fall below the minimum system RA requirements proposed in the CAISO’s draft. LRAs that do so should be permitted to maintain the program elements, including the planning reserve margin, that are justified by that LRA’s circumstances and the Load Serving Entities (LSEs) under the LRA’s jurisdiction may demonstrate RA compliance consistent with their LRA-approved program. We believe that this will serve to meet the needs for system reliability while recognizing the authority of LRAs to make determinations for entities under their jurisdiction and while protecting system reliability.
This demonstration process could be accomplished by an attestation with supporting documentation. The process should not be overly prescriptive since LRAs may have very unique reasons for approving the RA program that best fits their jurisdiction. For example, Metropolitan can demonstrate a long history of a very stable and predictable load profile, and Metropolitan has firm import capacity on its CRA System for its RA contract supply. CAISO has recognized that Metropolitan does not lean on the CAISO-controlled grid to serve its load.[2] As the LRA, Metropolitan’s Board of Directors approved a reserve margin of five percent above Metropolitan’s net coincident peak hourly demand forecast.[3] Metropolitan arrived at this value based on the reliability of its resources and the stability of its load. Metropolitan’s resource stability is enhanced by the fact we do not rely on variable energy resources to serve our pump load, which makes Metropolitan unique in California and illustrates why it is unreasonable to establish a single minimum threshold requirement that essentially puts Metropolitan in a position to procure RA resources for others. In addition to Metropolitan’s five-percent reserve margin, its Federal hydroelectric resources are backed by reserves provided by the Western Area Power Administration. This provides Metropolitan additional assurance that its RA program is robust and can cover contingencies that may occur on the CRA System.
The demonstration process we are proposing for an LRA’s RA program provides LRAs with an incentive to confirm that their system RA requirements are sufficient to serve as the minimum requirements needed to protect overall system reliability. This approach is an equitable solution that maintains system reliability while respecting LRA jurisdiction and decision making. LRAs that fail to provide the attestation and supporting documentation would be subject to CAISO’s minimum system RA requirements.
The CAISO’s proposal would result in a cost shift, from other LSEs that rely on variable generation resources and with loads that are more sensitive to day-to-day changes, to Metropolitan. This ignores cost-causation principles and results in the LSEs leaning on MWD for additional supply cushion, which contradicts the primary objective of the proposed minimum standards. We urge the CAISO to develop a mechanism for LRAs to justify their programs and allow for planning reserve margins to be set below the CAISO minimum level. A one-size-fits-all approach cannot be justified as reasonable or necessary to support grid reliability.
[1] Metropolitan Water District of Southern California Comments on Resource Adequacy Enhancements 5th Revised Straw Proposal Supplement, Nov. 25, 2020.
[2] Memorandum from Keith Casey to the ISO Board of Governors, “Decision on proposed transmission access charge area,” April 24, 2019, at p. 2, available at: http://www.caiso.com/Documents/Decision_ProposedTransmissionAccessChargeArea-Memo-May2017.pdf.
[3] Metropolitan Water District of Southern California, Resolution 9227, Resolution Authorizing the Adoption of Resource Adequacy Program Elements as Metropolitan’s Local Regulatory Authority, dated June 13, 2017, available at:
http://www.mwdh2o.com/WhoWeAre/Board/Board-Meeting/Board%20Archives/2017/06-June/Resolutions/064857881.pdf
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Middle River Power, LLC
Submitted 01/29/2021, 03:16 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Middle River Power, LLC (“MRP”) continues to remain concerned about the proposed UCAP paradigm – in particular:
- How RA sellers and buyers will manage the risks of changing RA values in a bilateral RA construct (especially if multi-year forward requirements are adopted); and
- How the CAISO propose to assign UCAP values to solar resources.
MRP also has concerns about moving forward without a mechanism to discourage individual entity leaning.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
No position
MRP supports aspects of the CAISO’s Phase 2A proposal and does not support other aspects of the CAISO’s Phase 2A proposal.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
While MRP does not support the overall UCAP proposal, MRP will not object to, and may even support, certain aspects of the CAISO’s UCAP proposal below. MRP does not expect that the CAISO will take that narrower support for certain aspects of UCAP proposal as support for the UCAP paradigm in general, but MRP wants to make its position on the overall proposal clear up front.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Exempting certain outages from the UCAP calculation
MRP acknowledges and appreciates the work the CAISO has done to refine its UCAP proposal. MRP especially appreciates that the CAISO is proposing to exempt outages beyond the control of the generating resource owner’s control (e.g., transmission-induced outages) from a resource’s UCAP value. Given the CAISO’s willingness to consider such outages beyond a generating resource owner’s control from UCAP, MRP urges the CAISO to reconsider outages that may be due to fuel insufficiency where that insufficiency is beyond the generating resource owner’s control, such as curtailments due to local gas network issues. (in the DFPP1/6RSP at page 79, the CAISO specifically identifies “Ambient due to Fuel Insufficiency” as outages that would impact a resource’s UCAP.) As with transmission-induced outages, there is nothing a resource owner can do – short of building a new fuel interconnection to a different fuel supplier’s network – to mitigate such outages. If the purpose of UCAP is to incent resource owners to take measures reasonably within their control to improve their availability, penalizing generating unit owners for fuel unavailability outside of their control will not accomplish that purpose. MRP fully agrees that any fuel insufficiency that is due to the resource owner’s or resource SC’s failure to acquire fuel for their unit should affect that unit’s UCAP value. MRP does not agree that any unavailability due to fuel insufficiency caused by the gas suppliers’ failure to deliver fuel to the resource should count against the unit’s UCAP.
General concerns with UCAP
On page 88 of the DFPP1/6RSP, the CAISO writes:
The CAISO disagrees that UCAP is incompatible with California’s current bilateral and monthly construct. First, the UCAP methodology detailed below is designed in such a way that the UCAP value of resources are driven by persistence of forced outage rates and should be relatively stable over time assuming the generator follows good maintenance practices. Second, many contracts already have contract provisions to deal with changes in capacity values. Third, CAISO expects secondary markets and contract mechanism to provide parties with sufficient tools to manage and hedge against risks. As stated above, the CAISO will be derating the resource’s deliverability and availability to reach the final NQC value. Today, many contracts already have existing provisions to deal with annual and even monthly changes in the NQC value of the resource. Most contract terms are also set at a $ per MW of NQC. By incorporating UCAP into the resource’s NQC values, any changes in the NQC value caused by increases in the resource’s forced and urgent outage rates this will result in decreased capacity payments. This provides the financial incentives to invest in proper maintenance of facilities to keep capacity payments high. Additionally changes in UCAP/NQC in a multi-year bilateral framework could also be handled through call options with other generators. Parties could also hedge by selling less NQC to self-insure against any future changes in the total NQC value of the resource due to changing outage rates.
The CAISO asserts that UCAP rates “…should be relatively stable over time assuming the generator follows good maintenance practices”. Given that the underlying philosophy of UCAP hinges on a strong correlation between forced outage rates and maintenance practices – can the CAISO demonstrate this causal relationship with empirical data? While MRP agrees that proper maintenance helps support increased availability, a unit’s availability is affected by more things than just proper maintenance. Said another way, a generating resource owner can perform all the recommended maintenance and still have their unit become unavailable to the unanticipated and unmitigable failure of a critical component due to an undetected design or manufacturing flaw. MRP agrees that it is important to properly maintain a generating unit, but MRP does not agree that unavailability is always the result of inadequate maintenance. A structure that incents generating unit owners to do certain things and holds them accountable for the things within their control may be a reasonable market design; a structure that imposes penalties on entities for things beyond their control is not.
Next, as MRP has noted in the past, the CAISO’s assertion that UCAP values will remain stable – as designed by the CAISO’s rolling three-year assessment period - can work against a generator. A generator that takes necessary and expensive maintenance to remediate, or protect against, reduced availability will have to wait three years for that investment to restore availability. This delay will not better incent generating unit owners to perform necessary maintenance more frequently; it will only incent them to try to “optimize” the cost of maintenance against the cost of reduced availability.
The CAISO offers that “many contracts have contract provisions to deal with changes in capacity values.” By that, does the CAISO mean that many RA contracts provide for negotiated financial impacts related to non-availability? Or does the CAISO assert that “most” RA contracts currently contain provisions that would restrict the amount of capacity that the unit can provide in the future – to the current counterparty or to any future counterparty - based on outages that occur when the contract is in effect? If it is the latter, can the CAISO identify what percentage of RA contracts contains such provisions? Moreover, can the CAISO offer its position on how, and to what extent, the transition to UCAP will affect existing contracts, which already may be in place for 2023 or beyond?
While the CAISO may expect secondary markets and contract mechanisms to mitigate a seller’s UCAP risk, merely expecting something does not bring that thing into being. Again, other markets that transact in UCAP have centralized, clearing-price, reconfiguration auctions that allow sellers to better manage their UCAP risk. The CAISO should not suggest that parties should avail themselves of mechanisms that do not exist or are not under the CAISO’s control to mitigate risks imposed by the CAISO. If the CAISO is going to create new risks for market participants, they should also create the mechanisms to mitigate those risks, not simply slough off those risks to RA contracts or other things (which may not exist) over which the CAISO has no control.
The CAISO proposes (DFPP1/6RSP at page 91) that a new resource’s UCAP value would be set at its Deliverable Qualifying Capacity (DQC) value, This does not seem reasonable. First, the well-known “bathtub” curve suggests that a generating unit is more likely, not less likely, to encounter availability issues in its first year of operation. Second, it is difficult to understand the CAISO’s willingness to assume a unit will suffer no availability issues in its first year of operation given the CAISO’s unwillingness to “reset” a resource’s UCAP value immediately following planned maintenance. While assigning a new unit’s UCAP based on fleet average availability performance may not be the optimal answer, MRP respectfully urges the CAISO to propose a first-year availability value that does not assume the unit will be fully available. If the CAISO insists on retaining a UCAP design that assigns a non-discounted DQC value to new resources, MRP urges the CAISO to allow the owner of an existing generating unit to “reset” its UCAP value following major maintenance.
Finally, MRP continues to object to setting a solar resource’s UCAP value at its ELCC value. Of all entities, the CAISO must be the most painfully aware from last August’s experience that a single capacity value cannot reflect a variable energy resource’s dependable contribution to serving load in all hours of the day.
MRP provides an updated graph comparing the CAISO’s UCAP assessment hours to normalized average August 2020 solar production shape:
See attached .pdf file for the graph.
From this graph, which shows that solar product is diminished or zero during a high percentage of the UCAP Assessment hours, it is not reasonable to conclude that assigning solar a UCAP value at its ELCC value will reasonably value solar’s contribution during the UCAP hours.
Finally, while the CAISO indicates that it plans to implement UCAP in a “clean transition” in 2023 (DFPP1/6RSP at page 100), MRP requests the CAISO provide its assessment of how the transition to UCAP, which presumably would be accompanied by the adoption of the CAISO’s new proposes UCAP minimum system requirement (based on using the 1-in-5 demand forecast plus six percent for operating reserves) would affect fundamental RA supply conditions. If implementing the CAISO’s proposal would result in LSEs being unable to secure enough unforced capacity to meet the CAISO’s new requirement in 2023, that should be known well in advance.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
Under a UCAP paradigm, the CAISO proposes to set (and, presumably, enforce) a system minimum system RA requirement that is (1) the 1-in-5 peak demand forecast plus (2) six percent for operating reserve requirements.
Again, while MRP does not support a UCAP paradigm, it is reasonable that, in a UCAP paradigm, the planning reserve margin would not have to include an allowance for forced outages.
While MRP strongly supports basing the peak demand forecast on a more stringent requirement than an average weather year, inherent in the CAISO’s proposal is the idea that the 1-in-5 peak demand forecast is sufficiently higher than the 1-in-2 peak demand forecast to account for demand forecast error in the 1-in-2 peak demand forecast. Given that this is a critical assumption, MRP requests the CAISO provide some quantitative analysis that confirms this assumption. MRP also observes that, given the universal expectations for hotter, more volatile weather in the future, simply covering the historical 1-in-2 peak demand forecast error (assuming that using the 1-in-5 forecast does that) may not be sufficient to ensure adequacy.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
Again, while MRP does not support moving to UCAP, the CAISO’s proposal to require that LSEs (and, presumably, the CAISO, if it engages in backstop procurement) secure an amount of NQC that provides for the needed amount of UCAP is reasonable.
MRP requests the CAISO clarify how Sections 6.1.3 and 6.3.3 of the CAISO’s proposal relate. In Section 6.1.3., the CAISO proposes to conduct individual deficiency tests and portfolio deficiency tests. As the CAISO describes, in the individual deficiency test, “LSEs that fail to meet the UCAP/NQC requirement will be notified of the deficiency and provided an opportunity to cure. LSEs that fail to cure may be subject to backstop procurement cost allocation.” But in Section 6.3.3, the CAISO offers that it is “…no longer moving forward with its proposal for a new tool, called the UCAP deficiency tool, which would have impose[d] deficiency charges on entities with deficient UCAP/NQC showings.” If there is a difference between the test described in section 6.1.3 and the test described in section 6.3.3, MRP does not understand the difference. MRP believes that allowing individual LSEs to lean on other LSE’s showings undermines market incentives and cost causation and would not support a design that takes no action against deficient LSEs.
Additionally, the CAISO observes that, where an individual LSE does not meet its minimum system RA requirement, the CAISO “may” undertake backstop procurement if the overall system showings are deficient. (DFFP1/6RSP at page 103). In a UCAP paradigm, the CAISO should always engage in backstop procurement where the system is deficient. If the CAISO adopts a UCAP paradigm, it must also change its backstop procurement authority from permissive to mandatory for system deficiencies.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
MRP understands the CAISO’s rationale for requiring that resources bid into the CAISO’s markets at values that correspond to the resource’s UCAP value. (For example, if a 100 MW [NQC] resource that is committed to providing all its UCAP had a 90 MW UCAP value, the resource would have to bid in at 100 MW.) This is a significant complication over the current paradigm, and MRP requests the CAISO provide examples as to how this would work under several conditions, including where resources are de-rated by outages.
MRP requests the CAISO explain this statement on page 106: “If resources receive an exceptional dispatch, they will be required to provide that energy real-time and would not qualify for an ED CPM designation when they respond to that exceptional dispatch.” This statement would seem to be true if the entire resource was committed to provide UCAP, but MRP does not see how it could always be true where the resource was not fully committed to providing UCAP.
The CAISO’s proposal to allow Local Regulatory Authorities to set the MOOs for demand response resources has the potential to prevent the CAISO from being able to rely on such resources to meet its operational needs. The long-standing dispute between the CAISO and certain LRAs regarding the use of 20-minute response DR for local capacity requirements is evidence of this possibility.
The CAISO observes (page 109) that eligible intermittent resources must bid in the energy value needed to derive the ELCC-based RA value. Would this be a different value than bidding in its forecasted output? If so, how would an EIR know what the bidding value should be? If not, then the CAISO should just require that EIRs bid in their forecasted output. (Whether it makes sense to continue to use ELCC values as RA capacity values for intermittent resources is a different, larger issue.)
Given that the CAISO continues to propose to exempt “Non-Generator Resources without default energy bids, Variable Energy Resources, Hydroelectric Generating Units (including Run-of-River resources), Proxy Demand Resources, Reliability Demand Response Resources, Participating Load, including Pumping Load, Combined Heat and Power Resources, Non-Dispatchable Resources, and resources providing Regulatory Must-Take Generation” from bid insertion, MRP reiterates its requires that the CAISO identify how much capacity these exempt resource represent in the next version of the CAISO’s proposal.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
MRP comments on individual subsections below.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
MRP has noted its concerns with the CAISO’s proposal for translating local capacity values on a TAC-area basis (see, e.g., pages 9-10 or MRP’s earlier comments at http://www.caiso.com/InitiativeDocuments/MRPComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf). MRP appreciates that the CAISO indicates a collective deficiency may exist within a local area due to the local UCAP translation (DFPP1/6RSP at page 111) but is not yet confident that the CAISO would act to cure such a local deficiency.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
MRP comments on individual subsections below.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
The CAISO observes that it will make CPM designations to cure UCAP deficiencies when there are overall UCAP deficiencies, but will not make any CPM designations when there are individual UCAP deficiencies if there is no overall UCAP deficiency. (DFPP1/6RSP at page 113). At the same time, the CAISO indicated it was not moving forward with its proposed “UCAP incentive mechanism”, which would penalize one LSE for “leaning” on another LSE’s UCAP showing. (Id.)
Having no mechanism to discourage or punish leaning in a purely bilateral market seems imprudent, and not aligned with generally-accepted market design principles regarding incentives and cost allocation. Not having a mechanism to discourage individual LSE leaning on other’s UCAP showings also seems inconsistent with the CAISO’s other efforts to prevent leaning in other market contexts (e.g, the Energy Imbalance Market resource sufficiency tests).
Further, while the CAISO said that “stakeholder comments” had caused it to abandon a mechanism to prevent leaning is a curious admission, inasmuch as the CAISO, many times in the past, pursued a controversial market design even when stakeholder comments did not support it. In sum, MRP believes it would be imprudent to pursue a market design that takes no action to dis-incentivize or punish individual entity leaning – something critically important, especially in a purely bilateral RA construct.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
While MRP understands that different DQC-to-UCAP conversion values for different resources could lead to the CAISO giving a CPM designation to a resource that has a higher CPM bid but also has a higher UCAP conversion factor, this complication also introduces the need to also provide greater transparency in the designation reports.
Given that the CAISO discloses the CPM price it will pay in the CPM designation report (see, e.g., the report at http://www.caiso.com/Documents/October_1_2018_Significant_Event_CPM_Designation_Report.pdf), for the sake of a lower-priced resource that was not selected because of a lower DQC to UCAP conversion value, the CAISO should make clear when it has selected a more expensive resource because of the resource’s higher UCAP conversion value.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
MRP does not object to the CAISO’s proposal to use the current 94.5% RAAIM availability target (presumably, with the current dead band) and the RMR unit’s unit-specific $/kW rate to penalize non-availability, provided that, as the CAISO also considers (DFPP1/6RSP at page 117) to modify the RMR contract as needed to allow for the generating unit owner to perform, and recover the costs of, the maintenance needed to obtain that 94.5% availability target. Given that the purpose of UCAP is to account for availability on a unit-specific basis, if the CAISO is not willing to recognize unit-specific availability for RMR units but feels compelled to enforce an arbitrary availability target on resources that may well be approaching the end of their useful life, it is important that the CAISO allow the unit owner to maintain the unit to achieve that standardized performance target.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
- Planned Outage Pool. Given the myriad details that must be worked out to make this viable, MRP is skeptical as to whether this approach could be successfully implemented. MRP acknowledges that there are no details as to how this would work and looks forward to the CAISO’s proposal.
- Flexible Resource Adequacy. MRP agrees that this is a very important topic, but also knows that plans to restructure the flexible RA requirements have been in the works for a very long time with not much to show for that time. MRP agrees that this topic has a strong nexus with the CAISO’s Day-Ahead Market Enhancements initiative – an initiative that, as the CAISO acknowledges (DFPP1/6RSP at page 118), has recently also become becalmed. MRP looks forward to these two initiatives moving forward soon.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
The CAISO’s phased implementation plan – in particular, proposing to defer more controversial and complex items until 2023 – is reasonable. It will take significant effort to develop some of the phase 2 elements (e.g., the planned outage pool and modifications to flexible resource adequacy).
While it goes without saying, MRP will say it: the 2022 implementation of some of the Phase 1 elements (In particular, RA import rules) will hinge on whether and how quickly the CPUC also embraces those proposed changes. The same can be said of the Phase 2 proposed changes for 2023, but with those elements there is more time available to finalize and implement those changes.
Mohan Niroula
Submitted 01/29/2021, 08:44 am
Submitted on behalf of
CDWR
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
CDWR appreciates CAISO efforts in developing various aspects of proposal under phase 2 as well as addressing concerns expressed by market participants.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Support with caveats.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
With a compliance requirement in terms of UCAP/NQC and demand based on 1 in 5 (about 4% above 1 in 2) requirements, CDWR estimates that compared to static standard of 15% planning reserve margin (PRM) today, the minimum PRM requirement will be about 19%, assuming 10% forced outage rates of shown resources.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
As stated in previous comments, CDWR recommends a UCAP calculation for participating load that is based on performance of dispatch instructions.
DQC and UCAP should be allowed to be updated if there is any increase in DQC within a year as is done today to increase NQC. Once annual DQC and NQC values are published they should be updated and published within a year based on DQC value update request from a supplier.
CAISO should publish top 20% supply cushion hours for calculation of UCAP each year in advance so that LSEs and suppliers can estimate associated UCAP for a resource. This information may be needed for long-term RA contracts.
For hydro resources, CAISO proposes an alternative to the standard UCAP calculation, which would use a historical year weighted average assessment of resource availability during the 20% tightest supply condition hours to capture the variability of hydro output. Historical bid-in capacity would be used to calculate a 50 percent exceedance and a 10 percent exceedance value. The CAISO proposes to weight the 50 percent value by 80 percent and the 10 percent value by 20 percent to determine the UCAP value. It would be helpful if CAISO provides a detailed example on how it will calculate UCAP. Does the bid-in value include the total bid (self-schedule plus economic bid) in an hour during any day of a particular month for the last 10 years? The example presented shows outages due to water unavailability and mechanical breakdowns instead of bid-in values as the metrics for UCAP calculation. Will the monthly UCAP calculation for a month be based for the same months of the last year 10 years? Since the value is not a weighted average value for each of the last 10 years, how will the proposed exceedance methodology ensure that diversity of hydrology is captured for capacity value estimation?
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
No comment.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
No comment.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
No comment.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
No comment.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
No comment.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
No comment.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
No comment.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
No comment.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
No comment.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
No comment.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
An excerpt of the section “Draft Final Proposal: 6.1.4 Must Offer Obligation and Bid Insertion Modifications” is shown below:
Under Resource Adequacy Must Offer Obligations, page 107:
“The CAISO proposes to apply the standard must offer obligation to use-limited resources and conditionally available resources, unless the underlying technology has a different offer obligation. 111 Use-limited resources have access to outage cards that can be used when use limitations are met. Conditionally available resources are also able to use outage cards to manage their conditionally available outages and derates.”
Under Bid Insertion, page 109:
“The CAISO proposes to apply bid insertion to use-limited resources and conditionally available resources, unless the underlying technology is exempt. The CAISO allows use-limited resources to include approved opportunity costs in their market bids. This ensures more effective and efficient use of resources in the market to facilitate regular and consistent market participation from resources with certain use limitations. Use-limited resources also have access to outage cards that can be used when use limitations are met. Conditionally available resources, which have regulatory or operational limitations that do not qualify as use-limited, will not be exempt from bid insertion. Conditionally available resources are able to use outage cards to manage their conditionally available outages and derates. The CAISO requires that conditionally available resources submit outage cards when unavailable, similar to all other resources on the system.
With the exception of use-limited resources, CARs, and energy storage, the CAISO will continue to exempt resources from bid insertion as defined in tariff section 40.6.8(e). These include Non-Generator Resources without default energy bids, Variable Energy Resources, Hydroelectric Generating Units (including Run-of-River resources), Proxy Demand Resources, Reliability Demand Response Resources, Participating Load, including Pumping Load, Combined Heat and Power Resources, Non-Dispatchable Resources, and resources providing Regulatory Must-Take Generation."
Most of the CDWR resources are use-limited and have the underlying technology of Hydroelectric Generating Units, Participating Load, and Pumping Load.
Does this mean that the Bid Insertions will NOT apply to CDWR’s use-limited resources, since the underlying technologies fall under the exempted categories as identified above?
Does this mean that the MOO will fall under the resource types below in the RA Bidding Requirements table, instead of standard 24x7 DA MOO?
|
Resource Type
|
Bidding Requirements
|
|
IFM
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RUC
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RTM
|
ISO Inserts Required Bids1
|
|
Hydro Units (without qualifying use limits)
|
Economic Bids or Self-Schedules are to be submitted for all available energy up to RA Capacity quantity (ISO Tariff 40.6.4.1).
|
No requirement to submit RUC Availability Bids but any bids submitted must be for $0. (ISO Tariff 40.6.4.2).
|
Economic Bids or Self-Schedules are to be submitted for all available energy, up to remaining RA Capacity (ISO Tariff 40.6.4.1).
|
No
|
|
Pumping Load (without qualifying use limits)
|
Economic Bids or Self-Schedules are to be submitted for all available energy up to RA Capacity quantity (ISO Tariff 40.6.4.1).
Participating load that is pumping load shall submit Economic Bids for Energy and/or a Submission to Self-Provide Ancillary Services in the Day-Ahead Market for its Resource Adequacy Capacity that is certified to provide Non-Spinning Reserve Ancillary Service.
|
No requirement to submit RUC Availability Bids but any bids submitted must be for $0. (ISO Tariff 40.6.4.2).
|
Economic Bids or Self-Schedules are to be submitted for all available energy, up to remaining RA Capacity (ISO Tariff 40.6.4.1).
Participating load that is pumping load shall submit Economic Bids in the Real-Time Market for its Non-Spinning Reserve Capacity that receives an Ancillary Service Award in the Day-Ahead Market.
|
No
|
CDWR has reiterated in previous submittals that a participating load resource cannot provide imbalance reserve and reliability capacity as a part of RA must offer obligation because of the current model limitation. Please confirm that there will be no change to the must offer obligation to a participating load resource.
Northern California Power Agency
Submitted 01/29/2021, 02:54 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Please see NCPA’s responses below.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Support with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Please see NCPA’s comments in response to Questions 4 – 7 below.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
NCPA supports CAISO’s intent to align OMS and RC outage types/classifications. In particular, NCPA supports adding the new “urgent outage” type to OMS. NCPA seeks clarification regarding the timeline on which urgent outages can be submitted to the CAISO. Specifically, will CAISO allow urgent outages to be scheduled beyond 8 days prior to the date on which the outage is to be scheduled? In certain circumstances, outages of urgent nature may require specialized technical support supplied by contractors, and scheduling such specialized work may take longer than 8 days. Enabling outages of urgent nature to be scheduled in advance of 8 days prior to the date one which the outage is to be scheduled will help resolve some of the current “Planned to Forced” outage reporting conflicts. NCPA believes it would be appropriate to allow outages of urgent nature to be scheduled in advance of 8 days prior to the date of which the outage is to be scheduled.
CAISO’s current proposal states that CAISO intends to include Urgent Outages in the UCAP performance calculation. NCPA believes it would be appropriate for CAISO to modify its current proposal to exclude Urgent Outages from the UCAP calculation when an Urgent Outage is approved by the CAISO in the planned outage timeframe. When an Urgent Outage is requested in the planned outage timeframe, if the CAISO operators determine that the outage can be approved without negatively impacting system reliability, that outage should not be counted against a resource’s UCAP performance calculation. If based on CAISO’s review of the urgent outage request CAISO operators determine that the outage has a negative impact on CAISO’s supply sufficiency, then the outage of urgent nature should be counted against a resource’s UCAP performance calculation, but the resource should be allowed to take the outage as a Urgent Outage and make any necessary repairs.
NCPA supports CAISO’s proposal to not count transmission-induced outages against a resource’s UCAP performance calculation. NCPA requests that CAISO supplement its proposal to also not count gas pipeline induced outages that are outside a generator’s control against a resource’s UCAP performance calculation. This type of outage is currently captured under the “Ambient not due to Temp” outage type. NCPA requests that CAISO either restore the “Ambient not due to Temp” nature of work to capture gas pipeline induced outages, or create a new outage type such as “Ambient due to Pipeline” to capture this type of event. Exempting outages caused by gas pipeline limitations from the UCAP performance calculation is consistent with the principle that outage that are due to “facilities [that] are not owned, operated, or maintained by the generator”, and as such should not negatively impact a resource’s UCAP performance calculation.
NCPA has serious concerns with CAISO’s proposed UCAP methodology for hydroelectric resources. Not only does the proposed methodology infringe on LRA authority to establish capacity standards, which CAISO has recognized in the RA program for well over a decade, but the proposed methodology could wrongfully undervalue the hydroelectric capability that CAISO will need in the future to integrate variable energy resources, and that CAISO relies on when grid conditions are tight.
It is critical that CAISO properly value hydroelectric resources. CAISO relied on dispatchable hydroelectric resources heavily during its recent tight supply conditions, and rightly so. Properly managed, hydroelectric resources with storage capability plan to have water available for the most valuable periods of the year, when supply conditions are tightest. For example, NCPA’s Calaveras hydroelectric project is primarily utilized for generation, and NCPA manages water storage and releases during the course of each hydro cycle so that there is sufficient water carryover from year to year to enable full generation whenever grid conditions are tight, even in drought years.
In CAISO’s current proposal, CAISO describes its proposed hydroelectric counting methodology as being generally consistent with the hydroelectric counting methodology outlined in the CPUC’s proposed decision in track 2 of the Resource Adequacy Proceedings. CAISO explains that its proposed methodology would use a historical-year weighted average assessment of resource availability during the 20% tightest supply condition hours using historically bid in capacity. CAISO further explains that the amount of capacity that is deemed available would be adjusted based on a resource’s fuel unavailability and mechanical outages. While this methodology may sound reasonable, NCPA has serious concerns with how this methodology is applied in practice based on observations from the CY 2021 NQC process, as further described below.
Based on the initial CY 2021 NQC results published by the CAISO, which NCPA understands were calculated using the CPUC methodology that CAISO claims is very similar to what is currently being proposed, the initial NQC values posted for NCPA’s Calaveras hydroelectric project were significantly reduced (as compared to historic values). The initial published CY 2021 NQC capacity ratings for NCPA’s project did not correctly represent the true availability of NCPA’s resource. For example, while the project has an operating capability of approximately 250 MW, the initial CY 2021 NQC published by the CAISO for September 2021 indicated that the NCPA hydroelectric project was only qualified to supply less than 100 MW of capacity. Based on how the project is managed and operated, including how water is stored and managed over time, the initial value assigned to NCPA’s hydroelectric resource was simply wrong, and significantly undervalued the operational capability of the resource. For example, when supply conditions where tight this past summer, CAISO frequently ordered NCPA’s resource to run at full capacity, and in response to such request NCPA gladly responded. NCPA has no doubt that at the time of need, CAISO will do the same in the future and call of the full operating capability of NCPA’s hydroelectric resource, regardless of what arbitrary QC rating that could be assigned to NCPA’s project. This experience causes NCPA to question what source of data CAISO used to calculate the initial value published for CY 2021. NCPA requests that CAISO clarify in its next revision of the Resource Adequacy Enhancements proposal what exact data source is CAISO planning to use to determine a hydroelectric resource’s Fuel Unavailability and Mechanical Outages (as described in the proposal). Notwithstanding the initial CY 2021 values published by the CAISO, NCPA, a non-CPUC jurisdiction LRA was able to update the final CY 2021 NQC value to properly reflect the true operational capability of its hydro project. NCPA, the project operator and the entity who coordinates and determines how storage is used and managed during the course of the operating period, is best positioned to determine what operating capability its project will have based on current system conditions. As such, NCPA supports allowing a resource operator to update any default hydroelectric QC value to reflect the true operating conditions and capability of a resource (rather than defer to historical measures that in many cases will not accurately represent current conditions).
LRAs must retain the right to set their own QC counting standards and conventions. CAISO and CPUC appear to have gravitated toward a one-size-fits-all approach reflecting political compromise and convenience more than a realistic assessment of individual unit performance. Non-CPUC jurisdictional entities have the ability to closely study and evaluate the resources in their jurisdictions and can adopt counting rules that allow for tailored and realistic results. For this reason, any default counting rules have been secondary to rules established by LRAs, and NCPA requests that it remains so in the new paradigm.
NCPA also opposes CAISO’s proposed minimum standards for QC counting whereby an arbitrary 10% cap is set on the lowest QC calculated for a resource by any LRA. CAISO offers no support for this value. As described above, and as seemingly applied in the past, the default Hydroelectric counting rule could unjustly harm hydroelectric resources that will be needed in the future to support system reliability.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
NCPA requests CAISO to provide additional information to support stakeholders’ review of the current proposal. Specifically, NCPA requests CAISO provide additional information to describe the key differences between use of a 1 in 5 forecast plus 6% as compared to a 1 in 2 forecast plus 10%, when it appears that the results of both methodology are roughly equivalent. NCPA also requests that CAISO provide additional data to compare the following scenarios: a 1 in 2 forecast plus 15%, a 1 in 5 forecast plus 6%, and a 1 in 2 forecast plus 10% during the past 10 years. Regardless of which methodology is adopted, CAISO must ensure the results are reasonable, cost effective, and can be accommodated by the resource fleet that exists.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
NCPA understands CAISO’s need to individually assess LSEs’ compliance filings, and that deficient LSEs may be subject to backstop procurement cost allocation, but NCPA supports CAISO’s current proposal to procure backstop capacity only in the event that the collective capacity showings made by all LSEs are deficient. NCPA agrees with CAISO’s conclusion that procuring backstop capacity merely because an individual LSE is deficient could result in excess procurement and unnecessary costs for ratepayers.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
NCPA appreciates CAISO’s recognition of the unique operating characteristics of a Load-Following Metered Subsystem (LF-MSS) and its commitment, stated on page 107 of the proposal, to not modify how resources that serve an LF-MSS are treated under the existing tariff. Under the existing tariff, NCPA is contractually required to balance its demand and supply in real-time during each 5- minute interval. If an LF-MSS fails to provide sufficient supply to meet its demand requirements in real-time, the LF-MSS is subject to significant deviation penalties. To perform its duties as a LF-MSS, NCPA is required to maintain sufficient capacity in real-time that it can move up or down to balance its portfolio. As a result, since the inception of the RA program, CAISO has exempted RA resources claimed by a LF-MSS, including RA imports, from the must-offer obligation. Because NCPA is responsible for maintaining its own supply balance and load following, it reduces the CAISO’s collective need for real time access to capacity. This unique operating practice has been historically recognized by CAISO in the context of Resource Adequacy, and how must offer and bidding requirements may (or may not) apply to a LF-MSS.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
No comment at this time.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
No comment at this time.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
No comment at this time.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
No comment at this time.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
No comment at this time.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
No comment at this time.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
NCPA looks forward to working with CAISO and stakeholders to develop the portfolio assessment element of the System RA Showings and Sufficiency Testing and associated backstop authority provisions, a planned outage pool, and a new Flex RA framework. In anticipation of the pending revisions to the Flex RA framework, NCPA urges CAISO to coordinate with the CPUC to ensure that any proposals to establish Capacity Procurement Entities do not inadvertently and unnecessarily constrain available Flexible RA capacity.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
NCPA strongly supports CAISO’s removal of the UCAP Deficiency Tool from the current proposal.
NRG Energy, Inc.
Submitted 01/29/2021, 02:12 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
For purposes of this round of comments in the RA Enhancements stakeholder process related to the sixth revised straw proposal, NRG Energy, Inc. (NRG) is solely focused on the introduction of unforced capacity (UCAP) into the CAISO’s resource adequacy framework. In principle, NRG is not opposed to a UCAP construct. In fact, UCAP has been successfully deployed in other parts of the country. However, the primary feature that exists where successful deployment has occurred is the existence of a centralized capacity market. California does not have such a market structure. Without that market structure, the variability that is an inherent feature of UCAP makes it difficult to introduce UCAP in California.
In the absence of a well-organized centralized capacity market, generators, including NRG, have long advocated for a multi-year forward capacity compliance regime to provide generators adequate longer-term revenue certainty to make informed operational decisions about their maintenance practices. Recent steps in that direction have helped generators and reliability generally. However, the uncertainty of UCAP makes contracting multi-year ahead inefficient. With individual unit UCAP values subject to likely variation on a year-to-year basis, the implementation of UCAP will force generators to add incremental pricing to capacity to account for uncertainty in the out-years of a capacity contract. In other markets, a liquid, multi-stage, centralized capacity auction can alleviate such uncertainty, allowing efficient outcomes; in California, the inefficient bilateral market cannot provide such comfort.
As discussed in its April 14, 2020 comments in this stakeholder proceeding, NRG remains gravely concerned that the introduction of UCAP will create a parallel capacity compliance framework to that which is already deployed by the CPUC. The potential for contracting around and complying with both UCAP and NQC standards is unwieldy, inefficient and should be avoided. For context, last year the CPUC adopted the Central Procurement Entity framework featuring a single buyer, a construct that promises to undermine what was becoming a more vibrant bilateral market for Local RA. At the same time, the CAISO is also proposing to adapt the UCAP framework for application in the Local RA compliance process. In such a future environment, it is not difficult to imagine a scenario in which a generator enters into a multi-year RA contract, the UCAP for the resource is lowered, and the owner of the resource will not have adequate commercial options to buy back the capacity needed to cover the shortfall. This concern is exacerbated by the fact that the CPUC’s administration of NQC already introduces year-to-year uncertainty for certain renewable resources, largely because the CPUC is basing NQC on Effective Load Carrying Capability, which is changing due to methodology tweaks and updated data. Until there is general agreement between the CAISO and the CPUC about how to incorporate UCAP into both their resource adequacy frameworks, the CAISO should delay implementing UCAP into its own resource adequacy framework.
In addition to concerns generally regarding the deployment of UCAP by the CAISO, NRG does not support the proposal to evaluate the future availability and reliability of specific resources based on their historical availability during the top 20% of tightest supply hours. NRG contends that this approach is arbitrary, largely because there is no evidence suggesting that prior availability during this narrow range of hours is a predictor of when a resource will be available in the future. Implementing this arbitrary approach will result in the CAISO picking winners and losers in the capacity market and arguably leads to discriminatory treatment of similar generating resources. Instead, NRG recommends that the CAISO rely on an annual analysis similar to that reflected in the EFORd methodology articulated in NERC guidelines.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Olivine
Submitted 01/29/2021, 04:59 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Oppose with Caveats
Olivine continues to echo concerns of other parties on the lack of a specific ELCC proposal to evaluate. CAISO should work with the CPUC on a unified DR valuation for Resource Adequacy in order to provide clarity for LSEs and DR Providers.
Olivine appreciates CAISO moving from an SC to DRP-specific UCAP valuation for DR UCAP valuation. However, the alternative RA valuation proposal from CAISO will potentially double penalize DRPs that are already evaluated for Resource Performance in contracts or with the Load Impact Protocols. LIP analysis is largely based on DRP performance assessment, and CAISO's performance evaluation proposal would be largely duplicative analysis. If CAISO has suggestions for improvements in LIPs, these should be discussed in the RA proceeding prior to any changes in CAISO assessment methodology. CAISO's performance evaluation alternative should be limited to DR programs without a programmatic or CPUC-administered Qualifying Capacity methodology. If CAISO does move forward with any performance evaluation methodology, CAISO should ensure that DR performance is not systematically undercounted. Recent analysis has suggested during 2020 events, CAISO's day matching baseline did not sufficiently capture resource performance1. Prior to implementation, Olivine suggests a 1-year trial period with no binding QC implications. This would allow for DRPs time to revisit contracts and program participation.
Given the imperfections complexities in estimating DR performance, the proposal could benefit from a dedicated stakeholder call prior to finalization. Olivine suggests the following refinements to CAISO's proposed DR valuation:
- Analysis starts no earlier than 2020, the first year where new resource dispatch options were available.
- Only awards with at least 15 minute dispatch should be counted (5-minute performance is often not able to be fully accounted for since most accounts are on 15-minute metering).
- Performance measurement for each event should not be capped at 100%. Imprecision in baselines means that even if resources always meet their dispatch commitments, the measured performance may be significantly greater or lower than 100%. The overall maximum for a DRP should still be capped at 100%.
1For example, see SCEs analysis on page 41 in testimony here indicating DR Baselines undercounted resource performance. https://docs.cpuc.ca.gov/PublishedDocs/SupDoc/R2011003/3308/359864615.pdf
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
Olivine supports deferring Must Offer Obligations for Demand Response Resources to the LRA. For bilateral RA contracts, we suggest a transparent process to ensure that CAISO approves of program limitations as envisioned. CAISO should also be clear that non-IOU programs that qualify for supply-side RA will have program limitations recognized in bidding obligations.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Pacific Gas & Electric
Submitted 02/01/2021, 09:29 am
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
PG&E's comments are summarized as follows:
- Minimum system RA requirements: PG&E reiterates our request that CAISO provides a robust analysis supporting this proposal to set a minimum requirement at 1-in-5 gross load plus six percent of that forecast. PG&E requests the CAISO work in close cooperation with the LRAs, CEC, and all stakeholders to set such minimum system RA requirements. Adjustments to the PRM used for system RA requirements would have substantial impacts on procurement and require a re-evaluation of major reliability assumptions.
- Must Offer Obligation: PG&E does not support many of the revisions to the Must Offer Obligation proposal. PG&E believes RA resource must-offer obligations should reflect a resource’s physical capability, provide the proper incentives to be available, and produce fair treatment in relation to other resources.
- UCAP counting/exempt outages: PG&E does not agree that natures of work outside of the operator control and do not reflect a facility’s ability to generate in the future should impact the resource UCAP value.
- Unforced capacity evaluation: PG&E is concerned about the DQC/NQC-UCAP terminology and recommends delaying the adoption of UCAP reforms until the CPUC’s reforms are complete. PG&E still believes these reforms create confusion, and PG&E has concerns with the meaning of NQC changing over time. This also needs to be further assessed from a contractual and legal standpoint, since the NQC value will not have the same meaning under the UCAP construct, it will still require contract amendments.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
See the answers below (questions 4 and 5).
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
DQC-UCAP/NQC terminology:
PG&E does not believe the implications of the CAISO’s new QC terminology has been completely vetted and PG&E requests keeping the current NQC terminology and delaying this UCAP proposal until the CPUC Track 3 and Track 4. decisions are made.
Changing the underlying meaning of NQC and introducing DQC to mean what is currently NQC will not obviate the need for entirely new commercial structures.
The CAISO proposes to implement the DQC terminology which stands for Deliverable Qualifying Capacity. The existing NQC (Net Qualifying Capacity) would be replaced with the term Deliverable Qualifying Capacity (DQC). Then the DQC adjusted for availability (forced and urgent outages) could be named NQC (instead of UCAP) under the UCAP framework.
PG&E still believes this creates much confusion, and PG&E has concerns with the meaning of NQC changing over time. This also needs to be further assessed from a contractual and legal standpoint since the NQC value will not have the same meaning under the UCAP construct, it will still require contract amendments.
Counting methodology:
- Demand response:
CAISO proposes that, “If UCAP Is adopted, the CAISO plans to use ELCC for DR – or a performance metric at the demand response provider (DRP) level.” PG&E would like to have more details on what performance metric the CAISO plans to use at the DRP level if ELCC is not adopted.
PG&E recommends this be applied at the program level and not just the DRP level.
UCAP exempt outages
The CAISO shows the existing nature of work categories for forced outages (table 3 pages 78-79). The CAISO will use the nature of work designation and outage type to determine whether an outage will be incorporated in the UCAP calculation. PG&E does not agree that natures of work outside of the operator control (and do not reflect a facility’s expected ability to generate in the future) should impact the resource UCAP value.
First, the CAISO specifies that “If a resource is unavailable due to an outage on equipment that is not a part of the CAISO Controlled Grid, those outages should be submitted as a separate nature of work category and will be included in the UCAP calculation.” Currently, outages on both the transmission and distribution grid are Transmission related natures of work, without RAAIM charges. In the Outage Management BPM, the CAISO states that the card is “to be used if Transmission equipment outage curtails a generator output, or distribution equipment outage in the case of distribution-connected generator.” With this policy proposal and by specifying the CAISO controlled grid, the CAISO is introducing an inconsistent treatment of distribution connected generation. An outage on a 60 kV line does not mean that a generator is less likely to be available in future years.
Second, natural gas pipeline outages are completely beyond the control of the generator and do not reflect future generating potential. Furthermore, generators generally do not know of natural gas pipeline outages within the planning timeframe, in time for the RA filing. If a natural gas fired generator has no choice but to take an outage because of pipeline work, the future ability of this generator to be available is not impacted.
Third, if a generator needs to use a Use Limited card, that means that the CAISO’s opportunity cost model has produced incorrect results, or the CAISO has needed to dispatch the unit despite opportunity costs. Again, use of these cards has no bearing on future generation and should not affect UCAP.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
The CAISO proposes (pages 101-103) to set a minimum requirement at 1-in-5 gross load plus six percent of that forecast. The CAISO explains that “this ensures the minimum planning standard addresses a broader range of potential load conditions, many of which are higher than the average load. The practical effect of the CAISO’s proposal is similar to setting the requirements based on a 1-in-2 forecast with a 10 percent PRM under UCAP.”
PG&E requests CAISO conduct a robust analysis supporting this proposal to set a minimum requirement at 1-in-5 gross load plus six percent of that forecast. At the September workshop, the CAISO presented analysis of the June RA showings converted in UCAP. At the January stakeholder meeting, the CAISO provided the same analysis for the months of August and November 2020. Based on this analysis the CAISO concludes the data supports the roughly 10% forced outage rate of the system and believes that the UCAP requirement should be set at a minimum of 110 percent of forecasted peak. PG&E believes that three data points analysis might not be sufficient to reach conclusion for other months that were not studied and could not be considered as a robust analysis.
PG&E still requests the CAISO to demonstrate that moving the forced outages from the PRM to the resource counting would be done on a basis to maintain the same level of reliability on the system (e.g., LOLE would stay the same).
PG&E requests the CAISO work in close cooperation with the LRAs, CEC, and all stakeholders to set such minimum system RA requirements. Adjustments to the PRM used for system RA requirements would have substantial impacts on procurement and require a re-evaluation of major reliability assumptions.
As already raised in previous comments, PG&E believes more robust analysis should be done on: 1) Planning Reserve Margin (PRM) adjustments under the UCAP paradigm; 2) a demonstration of the average percentage of UCAP capacity versus NQC capacity at system level; 3) the appropriate incentives replacing RAAIM by UCAP; 4) the appropriate basis of selection for the UCAP assessment hours (See page 2-3 of PG&E’s comments on the Fifth Revised Straw Proposal).
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
The CAISO will continue policy development on the portfolio assessment of the System RA Showings and Sufficiency Testing deficiency test in a future revised straw proposal.
PG&E redirects the CAISO to PG&E’s latest comments submitted on 11/25/2020 on the Portfolio Preliminary analysis (here the link: PG&E’s comments) for CAISO consideration.
In particular, PG&E believes correlation and sensitivity analysis on load forecast, imports, batteries are needed, and the CAISO should provide further information on the correlations used between the variables used in the model. Assumptions around imports and storage in particular need additional discussion to judge the appropriateness of the modeling.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
PG&E does not support the Must Offer Obligation the CAISO proposes. PG&E believes RA resource must-offer obligations should reflect a resource’s physical capability, provide the proper incentives to be available, and produce fair treatment in relation to other resources.
The CAISO should continue to explore alternatives to the proposed day-ahead 24 by 7 standard must offer obligation
The CAISO should work closely with the CPUC to help align individual resource MOOs to revised MCC buckets. The CAISO has highlighted MCC buckets as a valuable RA design construct, pointing to it as the appropriate means of guiding LSEs in their procurement to ensure that they – and the system as a whole – have the right types of resources for the CAISO to reliably operate the grid in all hours. PG&E has supported redesigning MCC buckets in comments to the CPUC. This effort would serve to better align the CAISO and CPUC RA programs.
Additionally, the CAISO should clarify MOO requirements within the tariff, not in the Business Practice Manuals, to alleviate perceived legal or regulatory risk for participants.
The CAISO has not adequately addressed PG&E’s concern that a day-ahead-only MOO could increase direct and uplift costs.
Previously, PG&E expressed concern that not having the RT MOO could result in increased redispatch and uplift costs. In response, the CAISO pointed to the Imbalance Reserve (IR) product proposed in its Day-Ahead Market Enhancements initiative and data analysis in that proposal. This response does not fully address PG&E’s concern, as the IR product does not appear to manage local constraints, which have been the main driver of real-time congestion offset costs.
The CAISO should provide an impact analysis of removing the real-time must offer obligation, once the DAME IRs products are rolled out and set an implementation plan only based on this evaluation. This analysis should demonstrate how the new products being developed in DAME could impact redispatch needs between DAM and RTM. This analysis should include assessing the impact the redispatch needs have on the Real Time Imbalance Offset costs and the Exceptional Dispatch needs.
MOO for storage:
PG&E is concerned that a must-offer requirement that enforces both charge and discharge bidding in the same hours imposes a must-offer requirement on batteries that is not equivalent to the generation must-offer requirement on other generating resources because it allows not only a reversal of a resource’s day ahead position but a counter-award that is likely to be adverse to the battery operator’s daily planning processes (and in the case of co-located resources, may significantly impair ITC values).
Additionally, PG&E is concerned that changes in the storage MOO are being made under the heading of the RA enhancements initiative that will be implemented a year prior to the initiative’s implementation as a whole. These aspects of the initiative should have been considered in concert with the closely related ESDER4 initiative, and the interactions between the two initiatives have not been appropriately discussed with stakeholders by placing MOO, bid insertion, and minimum state of charge requirements (with incomplete descriptions of the actual implementation of all three) under the RAE heading.
MOO for hydro
PG&E and the CAISO successfully worked together to create a paradigm to reevaluate the QCs for hydro resources. Under this system, the inability to operate for water conditions will show up in future QCs. However, it does not make sense for hydro to have a MOO up to this calculated DQC.
In the 6th Revised Draft Proposal, the CAISO says they will “apply the standard must offer obligation to use-limited resources and conditionally available resources, unless the underlying technology has a different offer obligation.” The CAISO further states “Conditionally available resources are also able to use outage cards to manage their conditionally available outages and derates.” Having a must offer obligation and using outage cards for Hydro resources does not make sense. For example, it appears that the CAISO expects outage cards to be submitted for CAR resources to reflect their as-available must-offer obligation, which tells the CAISO nothing about the potential for that resource to provide more capacity under an exceptional dispatch scenario. Mandating cards creates additional work for PG&E hydro operators and CAISO operators without achieving any reliability gains.
The CAISO needs to accommodate the physical realities of the hydro system. The CAISO has attempted this multiple times: first in Commitment Cost Enhancements Phase 3 (CCE3) by creating use limited status, then with the creation of CAR status, and, most recently, the implementation of Run of River status. PG&E has spent a significant amount of staff time working with the CAISO to try and respond to these changes, but none of them accurately address the nuances of the hydro system. PG&E appreciates the need for the CAISO to understand what resources they have available but adding must-offer obligation language for hydro would shoehorn these resources into a system which does not work for them.
The CAISO should take the following actions to address this problem:
- Revise the language in the must-offer obligation section to have all hydro submit bids for energy or as available energy up to the RA quantity. This would the existing CAR language to all resources with the hydro QC based on historical exceedance, but not those that choose to have a QC above the historical exceedance calculation.
- Consider tools other than OMS to reflect water availability. All of the same reasons that make outage cards not a viable tool for hybrid resources apply to hydro (for availability due to water conditions). The use of outage cards for hydro resources continues to be appropriate for mechanical outages, but not for water availability.
MOO for DR:
- PG&E supports the CAISO’s proposal to “defer to the local regulatory authority to establish program parameters for demand response – If none established, resource must follow standard must offer obligation – Days and hours resources must bid must be clearly communicated through LRA-approved documentation such as contract provisions or decisions.”
- PG&E supports that,” Reliability Demand Response Resources (RDRR) will still have the option to bid day ahead and must be available in real-time.”
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
See answer below question 9.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
PG&E is still concerned that the proposal to convert an NQC (now DQC with the current proposed terminology) requirement into a UCAP equivalent value will apply an unnecessary outage rate for resources that count towards a local requirement that already accounts for generator outages (see page 1-2, PG&E's comments on the Second Revised Straw Proposal). From a reliability standpoint, PG&E would like to better understand if the different translation from NQC to UCAP will not result in excess margin. PG&E reiterates its request that the CAISO demonstrate how this calculation will impact the different local areas and show if the UCAP calculation improves the reliability in local areas.
PG&E supported earlier a common metric to apply to system and local RA counting. Following the CPE (Central Procurement Entity) decision, PG&E now questions how the relationship between local and system will reconcile (since one MW UCAP for system RA will not count the same for local RA).
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
See answer below questions 11 and 12.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
PG&E welcomes and supports the removal of the UCAP deficiency tool.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
The CAISO has left its backstop provisions proposal largely unchanged. PG&E reiterates previous concern on the soft offer cap.
The CAISO has proposed that it will maintain the current CPM soft offer cap, tied to NQC. When the CAISO conducts backstop procurement to meet UCAP requirements, the effective capacity price, on a UCAP basis, may be much higher. Since the CAISO proposes that LSEs will have UCAP RA compliance requirements, for both system and local, and will backstop to these requirements for system RA, this effectively raises the system RA soft offer cap.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
PG&E generally supports the proposed availability penalty structure for RMR Resources as presented.
One element that been addressed in the RMR penalty structure is the efforts that the CAISO will take to appropriately incent behavior to ensure that the resource is available to meet the reliability need for which it was designated. This approach seems to treat every hour the same for a MOO and should ensure that the resource is available for the most needed hours.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
PG&E welcomes CAISO’s proposal to work with stakeholder on developing a longer-term solution for the planned outage process with the proposed objectives to be implemented in phase 2B (as described in sections 5.1.1 and 7. of the Proposal).
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
No additional comments.
Public Advocates Office - California Public Utilities Commission
Submitted 01/29/2021, 02:25 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
- The Public Advocates Office at the California Public Utilities Commission (Cal Advocates) continues to oppose the Unforced Capacity (UCAP) counting methodology because it would shift costs from generators to ratepayers and would increase ratepayer costs by requiring load serving entities (LSEs) to procure additional Resource Adequacy (RA) capacity.
- Cal Advocates opposes the proposal that the CAISO establish minimum system requirements. Instead, Local Regulatory Areas (LRAs) should retain that authority. The CAISO should present evidence of any LRA deficiencies and develop solutions appropriate to the specific shortfalls of those LRAs.
- The CAISO should develop changes to RA requirements through existing proceedings, such as the California Public Utilities Commission’s (CPUC’s) RA proceeding.
- If the CAISO’s RA Enhancements initiative results in any modification to the timeline for deficiency notification and/or the cure period, the CAISO should ensure that the adopted timelines maintain sufficient time for LSEs to cure any deficiencies.
- Cal Advocates opposes the use of UCAP calculations in determining local RA values of resources.
- Cal Advocates supports implementing a must run availability penalty structure that would penalize RMR resources if they are not available to the market for at least 94.5% of hours in a month.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Cal Advocates has no comment on this topic at this time.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
The following description is necessary in order to maintain clarity of terminologies. Presently, the CPUC and CAISO use the net qualifying capacity (NQC) method to determine a resource’s contribution to RA requirements. However, the CAISO’s proposal to adopt UCAP and related changes defines the existing counting method as “deliverable qualifying capacity” (DQC) and uses the term NQC to mean UCAP counted capacity.[1] These comments refer to capacity measured using existing NQC methodology as “DQC” and capacity volumes in terms of UCAP as “UCAP.”
The CAISO’s proposed UCAP is a counting methodology similar to the current capacity counting method (net qualifying capacity or NQC but referred to in the CAISO proposal and herein as DQC) which determines a resource’s reliability value. Unlike DQC, the UCAP methodology reflects a resource’s forced outage rate.[2] Adoption of UCAP would require many adjustments and modifications to the existing RA framework, including modifications to the planning reserve margin (PRM), and would cause major impacts to RA requirements and how LSEs meet those requirements.[3]
Cal Advocates opposes the proposed UCAP and related changes (UCAP construct) because a UCAP construct would shift costs from generators to ratepayers and increase ratepayer costs by requiring additional RA procurement by LSEs. The CAISO has not demonstrated that the proposed UCAP construct would provide cost efficient incremental reliability benefits compared to the status quo or alternatives, such as a modification of the RA Availability Incentive Mechanism (RAAIM) or an alternative means of accounting for forced outage rates in RA requirements.[4]
The proposed UCAP construct is structured to shift the costs of outages from resource owners to ratepayers. The UCAP construct incorporates a resource’s history of forced outages into the resource’s UCAP value, which in turn is used as the resource’s RA capacity value.[5] Under the current RAAIM penalty structure, generators that undergo a forced outage are penalized and bear the responsibility of finding substitute capacity.[6] However, by removing RAAIM penalties, forced outage substitution requirements, and internalizing forced outages into the measure of RA capacity value, ratepayers will be forced to pay the guaranteed costs of additional up-front RA procurement through LSE procurement required by the proposed UCAP construct. Costs may be compounded by an in-development CAISO proposal to require LSEs to procure additional capacity to establish a pool of substitute capacity to address outages, rather than maintaining the scheduling coordinator’s existing obligation to procure substitute capacity if necessary.[7] Thus, instead of incentivizing existing resources to improve the quality of their performance and to pay penalties if they under deliver, UCAP would require the procurement of additional resources and remove the penalty system that currently applies to LSEs and generators, all funded by ratepayers.[8]
The extent of incremental procurement implied by the UCAP will severely impact ratepayers.[9] Cal Advocates previously estimated that adopting UCAP would result in a minimum 3.7 percent system-wide capacity deficit that would have to be made up at ratepayer expense.[10] The CAISO estimates an average monthly forced outage rate for the RA fleet of 9.78 percent,[11] while the existing 15 percent Planning Reserve Margin (PRM) allocates four to six percentage points to forced outages, implying a minimum increase in UCAP requirements of at least 3.78 percentage points.[12] The final magnitude of this deficit could also be amplified by any changes to RA requirements that result from the CPUC’s consideration of proposals to change the PRM in Track 3B.1 of Rulemaking 19-11-009.
In addition, several significant problems associated with the UCAP construct have not received sufficient study and remain unresolved. For example, the question of how the UCAP construct selects the sample of hours used to calculate a resource’s seasonal availability factor is still under consideration.[13] The CAISO first computes the RA supply cushion for all hours of May 2018 through October 2020, then selects the scarcest 20 percent of RA supply cushion hours as the sample used to calculate resource seasonal availability factors.[14][15] The CAISO then selects a resource’s seasonal availability factors based on its forced outages observed during the sample of RA supply cushion hours. The CAISO’s analysis suggests that using the scarcest 15 percent RA supply cushion hours as the UCAP assessment hours (instead of the scarcest 20 percent) optimizes the sample to better capture hours of overall system need.[16] Cal Advocates recommends that the CAISO instead use the top 15 percent tightest RA supply cushion hours as the UCAP assessment hours.
[1] CAISO Resource Adequacy Enhancements Draft Final Proposal- Phase 1 and Sixth Revised Straw Proposal, December 17, 2020 (DFP-6RSP), p. 74.
[2] DFP-6RSP, pp.72-73.
[3] Final Track 3B.2 Proposals of the California Independent System Operator Corporation, December 18, 2020, filed in CPUC Rulemaking 19-11-009, pp. 24-25.
[4] Cal Advocates’ Comments on the Fifth Revised Straw Proposal of the RA Enhancements Initiative, August 7, 2020, pp. 1-6; and Cal Advocates Comments on September 15 and 17 Working Group, 2020. Available respectively at: http://www.caiso.com/InitiativeDocuments/PAOComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf and https://stakeholdercenter.caiso.com/StakeholderInitiatives/AllComments/e0efc91f-6c4e-44be-a701-85039cefc61a#org-5e577f90-2d66-474e-8b8a-732437b8605a.
[5] DFP-6RSP, p. 91.
[6] The RA Availability Incentive Mechanism is further described at CAISO Tariff 40.9.
[7] DFP-6RSP, pp. 18-19.
[8] Cal Advocates Comments on the Fifth Revised Straw Proposal of the RA Enhancements Initiative, August 7, 2020, p. 6.
[9] Cal Advocates Comments on the Fifth Revised Straw Proposal of the RA Enhancements Initiative, August 7, 2020, pp. 1-5.
[10] Cal Advocates Comments on the Fifth Revised Straw Proposal of the RA Enhancements Initiative, August 7, 2020, p. 5.
[11] Final Track 3B.2 Proposals of the California Independent System Operator Corporation, December 18, 2020, filed in CPUC Rulemaking 19-11-009, p. 29.
[12] This increase is estimated as subtracting the PRM forced outage rate of 4 to 6 percent from the CAISO’s measured forced outage rate of 9.78 percent to arrive at a range of 3.78 to 5.78 percent.
[13] DFP1-6RSP, pp. 80-88.
[14] DFP1-6RSP pp. 81-83.
[15] CAISO Resource Adequacy Enhancements Draft Final Proposal and Sixth Revised Straw Proposal Workshop, January 5, 2021.
[16] DFP1-6RSP, pp. 83-84.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
System reliability requirements are currently determined by each LRA through its own specific processes, which include consideration of minimum Western Electricity Coordinating Council (WECC) reserve requirements.[1] The CAISO states that it has “…observed some LRAs are setting unusually low [minimum system RA] requirements or are attempting to meet the RA requirements with only RA ‘credits’ that do not have a commensurate showing on a supply plan of the RA credited resources.”[2] These minimum system requirements refer to methodologies used to forecast load and set an additional buffer, such as the PRM, which requires LRAs to establish a certain amount of capacity above forecasted load to account for regulatory requirements, forced outages, and forecast error which constituent LSEs must meet. The CAISO “believes it is necessary and appropriate to set a minimum system RA obligation to avoid LRA leaning and ensure LRAs meet a minimum equitable level of reliability.”[3] To address these concerns, the CAISO is proposing to establish a minimum system requirement that all CAISO-connected LRAs must meet.[4] Under the CAISO’s proposal, CAISO-connected LRAs would no longer be able to establish their own reliability requirements and associated PRM, unless those requirements exceed the CAISO’s reliability requirements. The CAISO’s proposal would limit the ability for LRAs to determine their own requirements.
The CAISO’s proposal to establish a minimum system requirement is not supported by any evidence or examples of deficient reliability showings at the LRA level or any impact to reliability at the system grid. Cal Advocates recommends that the CAISO present evidence to support its observation that some LRAs are setting unusually low RA requirements or are attempting to meet the RA requirements with only RA “credits” that do not have a commensurate showing on a supply plan of the RA credited resources. Such evidence may show it is more appropriate to develop a targeted solution specific to those LRAs, rather than establishing a minimum system UCAP requirement for all LRAs, which would significantly affect all grid connected LRAs.[5]
The State of California clearly places the authority and responsibility for determining reliability requirements on the LRAs pursuant to California Public Utilities (PU) Code Sections 380(a)[6] and 9620(a).[7] During the development of the RA program, the CPUC concluded that the determination of g RA requirements is properly within the jurisdiction of the CPUC.[8] The CAISOs affirmed this conclusion.[9] The Federal Energy Regulatory Commission (FERC) has also found that it is appropriate for state authority, rather than a FERC-jurisdictional independent system operator,[10] to establish RA programs and associated requirements.[11]
In addition to the CAISO’s proposal to assert control over establishing minimum system RA requirements, the CAISO also proposes a new methodology to determine those minimum system requirements. Currently, the CPUC’s system RA requirements are set by taking the California Energy Commission’s (CEC) 1-in-2 forecasted peak load of each month of a year and adding a 15% PRM buffer of the noncoincident peak load (referred to here as “1-in-2+15%”).[12] The CAISO proposes to instead use the CEC’s 1-in-5 forecasted peak load plus a 6% PRM of that forecast (referred to here as “1-in-5+6%”).[13] The RA value of resources to meet this requirement would also use the UCAP resource counting method rather than the DQC method.[14] UCAP values are similar to DQC but include forced outage assumptions, which generally decrease the RA capacity a resource can use to meet RA requirements.[15]
The CAISO’s current proposal does not estimate the volume of UCAP capacity needed to meet the requirements of the proposed 1-in-5+6% approach. To approximate procurement impacts, Cal Advocates used a simplified approach based on CEC data[16] for August 2020 and a recent CAISO approximation of DQC to UCAP counting conversion to estimate the capacity requirements and procurement impacts of CAISO’s proposed 1-in-5+6% requirement in terms of UCAP.[17] Using the existing DQC counting methodology, Cal Advocates’ analysis shows that the 1-in-5+6% approach would set capacity requirements lower than the 1-in-2+15% approach.[18] However, CAISO’s 1-in-5+6% approach would count resources in terms of UCAP, not DQC. Using an assumed RA fleet size equal to the 1-in-2+15% approach, Cal Advocates’ analysis found that incremental capacity of either 3,509 MW using UCAP, or 3,881 MW using DQC, would need to be procured to meet the CAISO’s proposed 1-in-5+6% requirements.[19] This additional procurement is specific to the analytical scenario used in the analysis. While the analysis uses CEC data that is also used to compute RA requirements, the required procurement amount computed by the analysis may not be an accurate projection of needs in future years if the requirement and UCAP are adopted. The analytical approach used is explained below in the Question 15 response field “Additional Comments” and data is provided in the attached worksheet.
Table: Comparison of the 1-in-2+15% Requirement and Proposed 1-in-5+6% Requirement and Procurement Impacts (quantities expressed in MW)[20]
At this time, Cal Advocates does not provide comments on the CAISO’s proposed 1-in-5+6% approach other than to note that the CAISO proposal would require significant incremental resource procurement compared to the status quo.
However, Cal Advocates opposes the CAISO’s proposal to set minimum system requirements in a unilateral manner. As discussed above, California PU Code Sections 380(a) and 9620(a) clearly provides state LRAs with the authority to establish their RA requirements.[21] The development and implementation of new RA requirements are more appropriately addressed by each LRA’s own stakeholder processes, such as the CPUC’s RA Rulemaking, (R.) 19-11-009. The CPUC has already begun a re-evaluation of RA requirements and the PRM in R.19-11-009, to which the CAISO is an active party.[22] Therefore, Cal Advocates recommends that the CAISO continue to participate in stakeholder processes where LRAs establish their RA requirements, including development or modification of PRMs, to ensure that system reliability is maintained.
[1] The WECC Minimum Operating Reliability Criteria is similar to the PRM, requiring 5-7% additional procurement of RA beyond forecasted needs and additional ancillary service reserves. See California Public Utilities (PU) Code Section 380(d) and 9620(b). See also WECC Standard BAL-STD-002-0, Section B(a)(ii)(b). Note: Hereinafter, all references to sections are to the California PU Code.
[2] DFP-6RSP, p. 101.
[3] DFP-6RSP, p. 101.
[4] It is unclear how existing WECC minimum reserve requirements for LRAs will be considered, if at all. DFP-6RSP, pp. 101-102.
[5] For example, the CPUC LRA makes up 91% of CAISO grid load. If another LRA is setting “unusually low” requirements, then a solution specific to that LRA would allow the vast majority of CAISO LRA load to avoid modification. CAISO Final Root Cause Analysis: Mid August 2020 Extreme Heat Wave, January 13, 2021, p. 41.
[6] California PU Code Section 380(a): “The [CPUC], in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.”
[7] California PU Code Section 9620(a): “Each local publicly owned electric utility serving end-use customers, shall prudently plan for and procure resources that are adequate to meet its planning reserve margin and peak demand and operating reserves, sufficient to provide reliable electric service to its customers.”
[8] “Given the strong interaction between resources procurement and resource adequacy, it is desirable that California policy-makers have the necessary decision-making authority. It is for this reason that the Commission believes that it should be responsible for addressing resource adequacy for roughly 90% of the ISO load located within the utilities’ service territories.” Decision (D.) 04-01-050, pp. 12-13.
[9] “[The CAISO] is not aware of any other entity besides the CPUC and/or local regulatory authorities… that can currently impose planning reserve/resource adequacy requirements. Accordingly, the CA ISO considers that the CPUC should clearly define planning reserve/resource requirements for these loads in a manner that is equitable and assures consistent treatment and requirements.” D.04-01-050, p. 13.
[10] As noted at page 13 of D.04-01-050, (citing FERC White Paper on Wholesale Power Market Platform, p. 5 Issued April 28, 2003 in Docket RM 01-12-000), the FERC stated that it would
Allow [a Regional Transmission Operator]/[Independent System Operator] to implement a resource adequacy program only where a state (or states) asks it to do so, or where a state does not act.” …. States may decide to ensure resource adequacy through state imposed requirements on utilities serving load within the region…” (emphasis added)
[11] The FERC has also previously rejected a similar CAISO proposal to set a mandatory 15% PRM for non-CPUC load-serving entities (LSEs) on similar grounds of deferring to state authority to set reliability requirements and PU Code 380 pursuant to California Assembly Bill 380 (Nunez, 2005). 116 FERC ¶ 61,274 at paragraph 1153 (Issued September 21, 2006 in Docket ER06-615-000):
We believe that setting a 15 percent reserve requirement for non-CPUC LSEs is inconsistent with [the Market Redesign and Technology Upgrade]’s purported deference to the RA programs of Local Regulatory Authorities. Therefore, we reject the CAISO’s proposal to set a 15 percent minimum reserve margin. We note that AB 380 directs the CPUC to establish, in consultation with the CAISO, RA requirements for LSEs under CPUC jurisdiction. AB 380 also directs other LSEs within California to develop their own RA requirements, consistent with WECC and NERC requirements, and directs each locally-owned, public electric utility to meet its planning reserve margin, peak demand, and operating reserve sufficient to provide reliable electric service to its customers. However, we believe that if a Local Regulatory Authority fails to implement a reserve margin, then the CAISO should continue to implement the 15 percent default reserve margin included in IRRP in order to ensure the reliable supply of energy at reasonable prices.
Available at: https://elibrary.ferc.gov/eLibrary/filedownload?fileid=11139433
[12] For a comprehensive explanation of determining CPUC system RA requirements, see: CPUC 2018 Resource Adequacy Report, August 2019, pp. 6, 14.
[13] The CAISO does not specify if this would be a monthly, seasonal, or annual type of requirement. DFP-6RSP, p. 103.
[14] As previously noted, these comments use “DQC” in place of the currently in-place “NQC” RA capacity counting method in order to balance consistency with the proposal document and avoid confusion.
[15] The RA Enhancements initiative’s primary goal is to implement a UCAP system, and the current proposal includes significant discussion of how forced outage rates and other factors are accounted for. DFP-6RSP, pp. 3-4.
[16] CEC 2019 Integrated Energy Policy Report, California Energy Demand 2019-2030 Managed Forecast – Mid Demand/Mid AAEE Case, February 2020, TN232306_20200304T111936, (CEC IEPR Forecast).
[17] CAISO Day 1 Presentation: RA Enhancements Draft Final Proposal and Sixth Revised Straw Proposal, January 5, 2020 (RA Enhancements Presentation January 5, 2020), p. 71.
[18] The data used showed a 2020 grid-wide 1-in-2+15% requirement of 52,494 megawatts (MW), and a 1-in-5+6% requirement of 50,444MW. Both these amounts are in terms of DQC.
[19] These capacity estimations are based on CEC data and PRMs rather than actual RA showing data in order simplify the calculations and avoid the use of market sensitive data.
[20] The data used to create this graph used CEC load data and previously released CAISO DQC-UCAP conversion rates. See the attached worksheet for data and Cal Advocates’ analysis as well as the narrative appendix in Section 15 of these comments. Preliminary load forecast data: CEC IEPR Forecast. DQC-UCAP Conversion: RA Enhancements Presentation January 5, 2020, p. 71. Available at: http://www.caiso.com/InitiativeDocuments/Day1Presentation-ResourceAdequacyEnhancements-DraftFinalPropsoal-SixthRevisedStrawProposal.pdf.
[21] California PU Code Section 380(a): “The [CPUC], in consultation with the Independent System Operator, shall establish resource adequacy requirements for all load-serving entities.” California PU Code Section 9620(a): “Each local publicly owned electric utility serving end-use customers, shall prudently plan for and procure resources that are adequate to meet its planning reserve margin and peak demand and operating reserves, sufficient to provide reliable electric service to its customers.”
[22] The RA Rulemaking will consider PRM proposals and other refinements to the system RA requirement in Tracks 3B1 and 4. Assigned Commissioner’s Amended Track 3B and Track 4 Scoping Memo and Ruling, December 11, 2020. See also R.19-11-009 E-Mail Ruling Regarding Additional Track 3B.2 Proposals, January 14, 2021.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
The CAISO proposes to notify an LSE if that LSE fails to meet UCAP requirements; the CAISO also proposes to provide LSES an opportunity to cure the deficiency.[1] Notification of deficiency and an opportunity to cure are consistent with the CAISO’s currently established review of RA compliance filings. However, the CAISO should clarify the proposed timeline for notification and the cure period in the next phase of this proposal. Currently, the CAISO issues notifications of deficiencies roughly two weeks after the LSE’s RA filings are shown to the CAISO on October 31st each year.[2] LSEs have ten to thirty days prior to the showing month’s deficiency to report any cured deficiencies.[3] If the CAISO’s RA Enhancements initiative results in any modification to the timeline for deficiency notification and/or the cure period, the CAISO should ensure that the adopted timelines maintain sufficient time for LSEs to cure any deficiencies.
[1] DFP1-6RSP, p. 104.
[2] See the CAISO’s most recent public notification of annual deficiencies, available at: https://www.caiso.com/Documents/Review-Final2020ResourceAdequacyComplianceFilings-Determination-Deficiency.html.
[3] The range of days depends on the type of RA deficiency. CAISO Tariff 40.7. See also the CAISO’s most recent public notification of annual deficiencies, available at: https://www.caiso.com/Documents/Review-Final2020ResourceAdequacyComplianceFilings-Determination-Deficiency.html.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
Cal Advocates has no comment on this topic at this time.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
Cal Advocates offers no feedback on this topic beyond the comments for section 6.2.1 below.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
Cal Advocates opposes the use of UCAP calculations to determine local RA values of resources. As noted by San Diego Gas & Electric Company (SDG&E),[1] Local Capacity Requirement (LCR) studies use a different load assessment than the load assessment CAISO proposes for calculating UCAP.[2] In addition, the determination of LCR already includes outage assumptions that increase the LCR. The CAISO proposal to apply a UCAP value that decreases the local RA value of resources subject to forced outage rates[3] may double-count outage assumptions and inappropriately increase reliability needs.[4] The CAISO’s proposed approach to use UCAP calculations in determining local RA values for resources would weaken local resources’ ability to meet the LCR without providing any commensurate reliability benefit. The CAISO should clarify how the UCAP requirement will address these concerns. If the CAISO insists on using UCAP calculations to determine local RA values, the CAISO should alternatively explore if the existing local requirement technical study can be modified to use UCAP definitions as the Department of Market Monitoring (DMM) has recommended.[5] The DMM explains that the UCAP conversion process may not add efficiencies to local procurement and may add uncertainty for resources to meet local requirements.[6] Altering the local capacity technical study process to utilize UCAP counting and assumptions may alleviate these inefficiencies and uncertainty.
[1] SDG&E’s Fifth Revised Straw Proposal Comments, August 7, 2020, p. 15.
[2] LCR uses a 1-in-10 summer peak load forecast, while the CAISO is proposing to use a 1-in-5 forecast. 2021 Local Capacity Technical Study, May 1, 2020, p. 8. See also DFP-6RSP, p. 103.
[3] Relative to the current DQC approach which does not include a forced outage derate of value.
[4] Outage classification for UCAP is continuing to be developed, while the LCR study manual includes deliverability status for certain contingency availabilities. 2021 Local Capacity Area Technical Study, December 23, 2019, p. 8.
[5] DMM Comments on RA Enhancements Fifth Revised Straw Proposal, August 13, 2020, p. 11.
[6] DMM Comments on RA Enhancements Fifth Revised Straw Proposal, August 13, 2020, p. 11.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
Cal Advocates offers no general feedback on this topic beyond the comments for section 6.3.4 below.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
Cal Advocates has no comment on this topic at this time.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
Cal Advocates has no comment on this topic at this time.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
The CAISO proposes to implement a reliability must run (RMR) availability penalty structure (APS) that would penalize RMR resources unless they are available to the market for at least 94.5% of hours in a month.[1] Since the CAISO is proposing to remove the resource adequacy availability incentive mechanism (RAAIM) which is used for both RMR and other RA resources, the Available Penalty Structure (APS) is a sufficient and similar replacement for RMR resources. The APS would credit any penalty charges against the LSEs’ financial obligations under the RMR agreement.[2] Cal Advocates supports such a structure. A penalty structure for RMR is necessary to incentivize performance and availability of the resource. If the APS applies a penalty that is proportional to availability, as opposed to a fixed rate that applies to any deficiency below 94.5% availability, the penalty will be appropriately commensurate to the resource’s reliability value.
[1] DFP-6RSP, p. 117.
[2] DFP-6RSP, p. 117.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
Cal Advocates has no comment on this topic at this time.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Cal Advocates has no additional comments at this time.
Provided below is the data narrative used in comments to Question 5, regarding proposal section 6.1.2:
Data narrative for Cal Advocates analysis of proposed minimum system requirements and UCAP conversion
The following describes Cal Advocates’ analytical approach for estimating the change in capacity volume required to meet the CAISO’s proposed 1-in-5+6% reliability requirements. Cal Advocates’ analysis uses CEC load forecast data to account for CAISO-wide coincident peak load.[1] For clarity, capacity volumes using present-day NQC methodology are expressed as “DQC” (deliverable qualifying capacity)[2] and capacity volumes in terms of UCAP are expressed as “UCAP”.
CEC data shows that the 1-in-2 CAISO coincident gross load peak forecast for 2020 is 45,647 megawatts (MW). Applying the current 15% PRM to this amount would set a system requirement of 52,494 MW, which CAISO-connected LRAs and constituent LSEs would meet in aggregate by providing RA capacity in an amount determined through DQC counting. The CEC’s 1-in-5 forecast is 47,589 MW. The CAISO-proposed 6% PRM for that forecast would be 2,855 MW, which creates a requirement of 50,444 MW. However, the CAISO’s proposed 1-in-5-based proposed requirement would be met by RA capacity expressed in UCAP rather than DQC. The CAISO recently estimated a DQC to UCAP conversion for August 2020 RA resources of 10.59%.[3] This conversion factor represents the average RA unit derating after accounting for forced outages. For Cal Advocate’s analysis, the physical DQC RA fleet is equal to the 1-in-2+15% requirement of 52,494 MW, which can be converted from DQC to UCAP by multiplying the DQC RA fleet by one minus 0.1059, creating a UCAP RA portfolio of 46,935 MW. The adjusted RA fleet leaves a capacity gap of 3,509 MW UCAP below the CAISO-proposed 50,444 MW requirement. In order to fill the gap, 3,509 MW of UCAP capacity must be procured, which can be converted to DQC by multiplying the procurement by one plus 0.1059, leading to 3,881 MW DQC. In other words, 3,881 MW of DQC capacity will have to be procured to meet requirements in a transition from a 1-in-2 forecast with a 15% PRM to the proposed 1-in-5 forecast with a 6% PRM.
See also the attached worksheet “Cal Advocates RA-E 6RSP Attachment 1.xlsx”
[1] Use of this data avoids both potentially market sensitive LRA-specific data and complications in the treatment of certain types of RA credits. The results shown are intended to provide an illustrative example of potential RA procurement impacts and may not account for all relevant variables and forecast inaccuracies. CEC 2019 Integrated Energy Policy Report, California Energy Demand 2019-2030 Managed Forecast – Mid Demand/Mid AAEE Case, February 2020, TN232306_20200304T111936.
[2] The CAISO currently proposes to refer to the present-day NQC counting process as DQC. DFP-6RSP, p. 74.
[3] CAISO RA Enhancements Draft Final Proposal and Sixth Revised Straw Proposal, January 5, 2020, p. 71. http://www.caiso.com/InitiativeDocuments/Day1Presentation-ResourceAdequacyEnhancements-DraftFinalPropsoal-SixthRevisedStrawProposal.pdf
Shell Energy
Submitted 01/28/2021, 04:01 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Shell Energy appreciates this CAISO stakeholder process which provides a forum for a diverse set of entities to thoroughly vet Resource Adequacy enhancement proposals. Resource Adequacy is complex; it is important to ensure an effective market design. Shell Energy seeks to promote reliability through markets and opposes details within the Sixth Revised Straw Proposal.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
Shell Energy opposes, unless amended.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Shell Energy supports a methodology to calculate NQCs in a manner which reflects resources’ demonstrated ability to deliver energy to meet peak loads through time. Shell Energy supports a UCAP construct, but additional vetting is necessary to better understand how the program would work with the current California monthly RA program.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Shell Energy does not oppose a UCAP construct; in fact, Shell Energy appreciates the effort CAISO has devoted to revising the RA program to reflect the RA fleet’s collective ability to serve demand in the tightest 20% of hours. However, Shell Energy is concerned adopting this proposal will create jurisdictional seams issues and conflict with the monthly structure of the RA program.
The CAISO does not directly address how the proposed UCAP design alleviates the concerns of stakeholders regarding the monthly and bilateral structure of the existing RA program in California. It is not sufficient to conclude many RA contracts have provisions for changes in qualifying capacity—contractual revisions are a costly and time-consuming affair. Any proposal would need to be prospective in nature to protect existing contracts, negotiated under the current RA framework.
Shell Energy agrees with CAISO’s assessment that secondary markets will emerge as a result of this proposal. Shell Energy additionally supports excluding planned and opportunity outages from the calculation of UCAP/NQC. However; Shell Energy does not support the CAISO’s proposal to penalize generators for urgent informational outages. Reducing UCAP/NQC values for urgent outages creates disincentives to declare these types of outages. This could result in generators “limping through” a problem and declaring an outage only when forced or imminent, potentially causing longer term damage to the facility. This is problematic as outage information signals “the health” of the generating portfolio in real-time to system operators and the RC. Resources should only be penalized for unforeseen problems developing which have an effect on available capacity/energy dispatchability.
Shell Energy supports “nature of work” categories’ impact on UCAP/NQC except for Metering/Telemetry outages. These outages are advisory and only impact the CAISO’s visibility of units; not actual capacity/energy contributions by the unit to the grid. This category should not apply to UCAP/NQC calculations as SCs can provide updates to CAISO operators manually. Often, Metering/Telemetry outages are caused by third-party failures such as RTU or communication faults, outside the control of the resource.
Shell Energy suggests a coordinated education campaign for SCs regarding OMS. Shell Energy is very familiar with OMS; it is clunky, glitchy and difficult to use. The many choices in the “nature of work” field in OMS are not straightforward; a new and more understandable naming convention is warranted considering large financial impacts an errant OMS ticket could have upon UCAP/NQC calculation. Shell Energy recommends the CAISO make it a priority to update the software and hold a workshop explaining improvements to OMS usability. At the very least, the CAISO must conduct training for SCs with specific focus on “nature of work” cards and publish in-depth notes for each “nature of work” option.
Shell Energy supports the proposed calculation of a seasonal availability factor and its 3-year lookback weighting. Shell Energy also supports the UCAP/NQC calculation method for all resource types except hydroelectric. The distribution of water year medians in CA are not highly correlated; therefore, Shell Energy suggests the CAISO use the past 15 years of hydro information to calculate fuel supply availability. A shorter 5-year lookback for maintenance is also appropriate as many hydroelectric resources have undergone major maintenance upgrades in the past 5 years. A longer maintenance lookback would overly penalize hydroelectric resources and not account for widespread investments made recently to the fleet.
Shell Energy supports removing all transmission-related impacts from the calculation of UCAP/NQC. Distribution-level outages should not impact resources’ UCAP/NQC; a resource has no impact on, or insight to these outages. The CAISO should invest tools with PTOs to provide transparency into the distribution system rather than penalizing resources. Shell Energy agrees curtailments or interruptions of (7-F) firm transmission should not affect UCAP/NQCs for import RA resources.
Finally, Shell Energy supports the SDG&E/SMUD proposed timeline for the RA Enhancements to be implemented—beginning in 2023 for RA year 2024 once the CPE has been running for one year; again subject to additional information about transition impacts to the current bilateral market.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
Shell Energy is concerned that the CAISO is overly punitive in its approach to LRA-jurisdictional entities’ RA-crediting for behind-the-meter (BTM) resources. System load can be decreased quickly by starting and ramping BTM generation upon CAISO instruction. These entities, in effect, “self-provide” some or all their RA requirements. These entities should not be subject to procurement obligations unless they fail to reduce load vis-à-vis increasing BTM generation.
Shell Energy encourages the CAISO to work with these affected entities.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
No comment.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
Shell Energy supports a RA resources’ MOO being set to the DQC.
Shell Energy cautions the CAISO against intertwining the RA Enhancements Initiative with the plans for the ongoing EDAM and DAMe proposals—both are still in significant development stages and not likely to be implemented in the near term.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
No comment.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
No comment.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
No comment.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
Shell Energy supports the CAISO’s current and proposed use of CPM under the tariff authority CAISO already possesses. Shell Energy supports abandoning the UCAP incentive mechanism.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
No comment.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
No comment.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
Shell Energy strongly supports the concept of a planned outage pool for monthly planned outages as it would with procuring replacement RA to conduct maintenance. Removing impediments to conducting planned maintenance will help increase reliability and up-time of the generation fleet.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Shell Energy does not support the proposed timing for implementing this initiative—especially in two phases. The complete RA Enhancements Initiative should be released in 2023 for RA year 2024 once the CPE has been running for one year.
Six Cities
Submitted 01/29/2021, 06:00 pm
Submitted on behalf of
Cities of Anaheim, Azusa, Banning, Colton, Pasadena, and Riverside, California
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Due to the broad scope of this initiative, the Six Cities do not have a single, overall position with respect to the topics addressed in the Sixth Revised Straw Proposal. Rather, the Six Cities support some elements of the CAISO’s proposals, do not oppose some elements, oppose some elements, and request further consideration or clarification with respect to some elements. As a high level summary, the Six Cities positions are as follows:
SUPPORT:
- The proposed two-step process for determination of Net Qualifying Capacity
- The proposed calculation of seasonal availability factors based on availability during the 20% tightest RA supply cushion hours
- Proposals to conduct individual deficiency tests for system capacity, to notify deficient LSEs, to provide an opportunity to cure any deficiencies, and to allocate backstop procurement costs (where necessary to address an overall system deficiency) in the first instance to LSEs that fail to cure an identified deficiency
- The proposal to set the Must Offer Obligation (“MOO”) at the level of deliverable qualifying capacity
- Proposals regarding the Capacity Procurement Mechanism
DO NOT OPPOSE:
- Proposals regarding Local RA
- Proposals regarding designation of UCAP/NQC quantities
- Proposal regarding the penalty structure for RMR resources
OPPOSE:
- Treatment of Urgent Outages the same as Forced Outages for purposes of UCAP valuation
- Unduly narrow classifications for “Exempt Outages”
- The unreasonably restrictive cut-off date for submission of Planned Outage requests
- Application of minimum QC values adopted by any Local Regulatory Authority (“LRA”)
- Proposals for minimum System RA requirements
- Application of the MOO to the charging function for co-located storage resources, absent a transition period
- Limiting portfolio sufficiency assessment to evaluation of the sufficiency of RA resources only without any consideration of sufficiency if non-RA resources within the CAISO BAA are reflected
REQUEST CLARIFICATION OR CONSIDERATION:
- To clarify that non-availability of an RA import due to curtailment of firm transmission service outside of the CAISO Balancing Authority Area (“BAA”) will not affect UCAP valuation
- To confirm that the current practice of using outage cards to manage use and availability limitations will remain in place
- To explain how entitlements in the Hoover Power Plant will either be exempted from the 24x7 MOO and bid insertion requirements or those requirements will be adapted for Hoover’s operational needs
- To include a transition period for co-located battery storage resources for which development agreements were executed prior to January 1, 2021 before applying a MOO to the charging function
- To allow monthly RA showings to include different RA values for a specified resource for different days of the month subject to the sum of RA values for each day satisfying the monthly RA requirement for the LSE submitting the showing
- To supplement the portfolio sufficiency assessment based solely on shown RA resources with an additional assessment including all RA resources plus non-RA resources within the CAISO BAA
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
No position
As described above, it would be most accurate to characterize the position of the Six Cities as supporting some elements of the Sixth Revised Straw Proposal (albeit with certain caveats) and as opposing other elements of the CAISO’s Proposal.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Please refer to the discussions below regarding specific sub-topics within Section 6.1.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
The Six Cities support the two-step process for determination of Net Qualifying Capacity and the proposed calculation of seasonal availability factors based on availability during the 20% tightest RA supply cushion hours. However, the Six Cities strongly oppose a number of the detailed elements of the proposed UCAP valuation methodology, as described below.
It is unreasonable to treat Urgent Outages the same as Forced Outages for purposes of UCAP valuation. As defined in Reliability Coordination Procedure RC0630 at page 15, for an Urgent Outage:
Facility/equipment remains in service until personnel, equipment and/or system conditions allow the outage to occur.
Urgent outages allow Facilities to be removed from service at an optimal time for overall system reliability. (Italics in original.)
Because an Urgent Outage by definition is coordinated to maintain overall system reliability, it is not reasonable to treat Urgent Outages the same as Forced Outages with respect to UCAP reduction. Moreover, reducing UCAP for outages that are coordinated with the CAISO and timed to support system reliability would create perverse incentives by discouraging such cooperative timing.
The CAISO argues at page 77 of the Sixth Revised Straw Proposal that it is appropriate to treat Urgent Outages the same as Forced Outages for purposes of capacity evaluation because Urgent Outages have “the same priority” as Forced Outages. The contention that Urgent Outages have the same priority as Forced Outages is plainly invalid given the definitions of the two types of outages. Under the RC0630 definition, a Forced Outage occurs when “Facility/equipment . . . is removed from service real-time with limited or no notice.” In contrast, as quoted above, removal of a facility or equipment from service pursuant to an Urgent Outage is coordinated to occur “at an optimal time for overall system reliability.” The two types of outages clearly do not have the “same priority” given the timing of Urgent Outages to support overall system reliability. Treating Urgent Outages the same as Forced Outages for purposes of UCAP valuation inappropriately fails to recognize the benefit to system reliability that results from collaborative timing for Urgent Outages.
The proposed classifications for “Exempt Outages” (i.e., outages that will not result in UCAP reductions) are unduly narrow. The criteria for exemptions from UCAP reduction (which should be specified in advance in the tariff) should include any reductions in resource availability that (1) are directed by the CAISO, and (2) are consistent with an operational procedure agreed upon by the CAISO and the resource owner or operator for reliability reasons. With reference to the classification chart at page 79 of the Sixth Revised Straw Proposal, the Six Cities object to reducing UCAP value for non-availability due to the exhaustion of short-term, annual, monthly, or other use limits. The CAISO requires that use limits be managed through application of opportunity cost adders to bids based on a CAISO-mandated methodology for determining the opportunity cost adders. If exhaustion of use limits occurs due to the failure of the CAISO opportunity cost process, it is unreasonable to reduce the UCAP value of the affected resource. The appropriate response in that situation is to adjust the methodology for determining opportunity costs so as to avoid exhaustion of use limits in the first instance.
The cut-off date for submission of planned outages is unreasonably restrictive. Although it is not entirely clear from the discussion at pages 76-77 of the Sixth Revised Straw Proposal, it appears that the CAISO now proposes to cut off the ability to submit requests for Planned Outages two to three weeks before the start date for an outage. Such an extended notice period for submission of Planned Outage requests is unnecessarily restrictive, especially if the resource requesting the outage offers to provide substitute capacity. As RA requirements increase and available supplies of RA capacity become more limited, scheduling of maintenance activities also is likely to become more challenging. Although the Six Cities agree that advance scheduling of maintenance is generally preferred, nearer term opportunities to conduct maintenance should not be unnecessarily foreclosed. The CAISO generally should seek to facilitate rigorous maintenance of RA resources, and imposing increased barriers to performing maintenance undermines reliability. If there is sufficient RA capacity available to the system to accommodate a request for an outage to perform maintenance submitted no less than three days prior to the proposed date to begin the outage, or if the resource owner offers to provide Substitute Capacity during the outage, the CAISO should approve the request. Further, any such outage approved by the CAISO should be defined as a Planned outage and should not adversely affect the UCAP value for the resource. Conversely, if RA capacity expected to be available to the system at the time for which an outage is requested is not sufficient to accommodate the outage and the resource owner does not offer to provide Substitute Capacity, then the CAISO should deny the outage request. If the resource owner nevertheless proceeds with the outage, then it should be classified as a Forced outage and reflected as such in the calculation of UCAP for the resource.
The Sixth Revised Straw Proposal is internally inconsistent with respect to the treatment of outages due to curtailment of firm transmission service outside the CAISO BAA. The Sixth Revised Straw Proposal states at page 80 that resource unavailability due to an outage on transmission equipment that is not part of the CAISO Controlled Grid will be reflected in the UCAP calculation. However, at pages 99-100, the Sixth Revised Straw Proposal states that the UCAP valuation for an RA import will not be penalized if a resource is unavailable due to curtailment of firm transmission service outside of the CAISO BAA. The Six Cities support the policy described at pages 99-100 of the Sixth Revised Straw Proposal, i.e., that non-availability of an RA import due to curtailment of firm transmission service outside of the CAISO BAA will not affect UCAP valuation. That approach will provide for treatment of RA imports affected by transmission outages most comparable to the proposed treatment of RA resources located within the CAISO BAA.
The Six Cities oppose application of minimum QC values adopted by any LRA. The proposed adoption of the minimum QC value established by any LRA (plus 10%) for a particular resource ID, as described at page 101 of the Sixth Revised Straw Proposal, would inappropriately elevate the determinations of one LRA over decisions of other LRAs. As the Six Cities understand the CAISO’s proposal, the CAISO would limit QC value for a resource to 110% of the minimum value adopted by any LRA without regard to the basis for or methodology underlying the minimum value. This effectively would bind other LRAs (as well as the CAISO) to potentially erroneous or arbitrary determinations or valuations based on a policy to disfavor a particular resource technology adopted by the LRA establishing the minimum value. There is no justification or authority for the CAISO to elevate the policy or methodology decisions of one LRA over all others.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
The Six Cities have concerns regarding the CAISO’s proposal to establish the minimum System RA requirements based upon a forecasted peak load of 1-in-5 plus six percent. The Six Cities understand that this approach correlates to a 17.5% planning reserve margin, which represents an increase relative to the CAISO’s current 15% planning reserve margin. According to the CAISO, the proposal to establish a minimum System RA requirement is motivated by a perception that some local regulatory authorities may have reduced requirements relative to the CAISO’s preferred level, thus resulting in “leaning” or attempting to meet requirements with credits not shown on supply plans.
The CAISO’s proposal raises two general issues – first, whether the CAISO should establish a minimum System RA requirement, and, second, if the CAISO does establish such a minimum, has the CAISO proposed an appropriate level?
As to the first question, the Six Cities are concerned that the CAISO, by establishing a mandatory minimum requirement (as opposed to a default requirement that would apply in the absence of LSE adoption of any minimum requirement), may be wading into questionable jurisdictional territory. It has historically been the adopted practice in California for local regulatory authorities to establish minimum requirement levels, and the CAISO’s proposal to intervene by setting a minimum level raises concerns that the CAISO may be infringing upon the authority of local regulatory authorities to make these determinations.
With respect to perceived “leaning” concerns, the CAISO has not, to the Cities’ knowledge, detailed the scope and extent of these concerns. In the absence of a compelling reliability problem that goes beyond generalized leaning concerns, the Six Cities question whether a uniform System RA minimum is necessary.
Moreover, while the CAISO appears to be asking the CPUC to adopt System RA requirements at the proposed level in the ongoing CPUC RA proceedings, with respect to other local regulatory authorities, such as local publicly owned electric utilities, including the individual members of the Six Cities, the CAISO proposes to simply dictate, presumably through tariff revisions, the minimum requirement. Such an approach is not consistent with the CAISO’s stated approach during the January 15th stakeholder workshop of “general deference” to LRAs with “coordination and collaboration.”
As to the particulars of the CAISO’s proposal, the proposed minimum requirement is lacking in detail as to how the requirement will be applied to the gross and net peak and how it may be differentiated as between the summer months, where the CAISO has suggested the higher level of requirements may be needed, versus the other months of the year when the proposal for a more stringent system RA requirement could be safely relaxed. Further, the Six Cities question if the proposed requirement can be satisfied given the challenges some LSEs have experienced in securing System RA during the summer months this past year.
Finally, the Six Cities have the following questions regarding the CAISO’s proposal:
- Will the 1-in-5 plus 6% standard have the effect of eliminating the California Energy Commission (“CEC”) coincidental factor that is applied to a utility’s load? If so, is one practical effect of implementing the proposal to remove the CEC from the RA planning process?
- Will the CAISO mandate that individual LSEs adopt a standard calculation methodology of a 1-in-5 load forecast or will the CAISO leave the choice of forecasting standard up to individual LSEs? LSEs may use different methodologies that incorporate weather uncertainty or other uncertainties around forecasting variables and/or model accuracy. To what extent will the CAISO’s proposal continue to permit LSEs the flexibility to adopt standards that reflect their individual circumstances?
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
The Six Cities generally support the CAISO’s proposal to conduct individual deficiency tests for system capacity as described in Section 6.1.3 of the Sixth Revised Straw Proposal, to notify deficient LSEs and provide an opportunity to cure any deficiencies, and to allocate backstop procurement costs (where backstop procurement is necessary to address an overall system deficiency) in the first instance to LSEs that fail to cure an identified deficiency.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
As discussed below, there are elements of the CAISO’s proposals within this topic that the Six Cities support, and there are other elements that the Six Cities oppose absent further revisions to the CAISO’s proposals.
First, the Six Cities support the CAISO’s proposal to set the MOO at the level of the deliverable qualifying capacity (“DQC”). This element of the CAISO’s proposals seems reasonably calibrated to a shift toward implementation of the UCAP construct.
Second, with respect to the CAISO’s proposals related to MOO and bid insertion, the Six Cities conceptually support the CAISO’s application of a 24x7 MOO in the Day Ahead Market for RA Resources, subject to the following comments.
Use Limitations and Conditionally Available Resources: It appears, based on the discussion at page 107 of the Sixth Revised Straw Proposal, that the current practice of using outage cards to manage use and availability limitations will remain in place. The Six Cities’ support is conditioned on the continued recognition of these limitations.
Hoover Power Plant: The Six Cities reiterate their previously expressed views regarding the specific implementation of the 24x7 MOO requirement and bid insertion rules as applied to the Six Cities’ Hoover Power Plant entitlements, for which sub-set of hours bidding is permitted today. It is critical that the next iteration of the CAISO’s proposal in this initiative address the particulars of how Hoover – and similarly situated RA resources – may continue to be used to provide RA given the proposal for a standardized 24x7 MOO. The Six Cities have consistently understood that the CAISO does not, through its proposal in this initiative, intend to limit the ability of LSEs with entitlement rights to Hoover to continue to rely upon their entitlements to provide RA capacity. The Six Cities therefore request that the CAISO explain how Hoover will either be exempted from the 24x7 MOO and bid insertion requirements or that these requirements will be adapted for Hoover’s operational needs. At a time when system RA capacity is relatively tight, the Six Cities encourage the CAISO to ensure that its rules are formulated in a way that highly reliable resources such as Hoover remain eligible to provide RA consistent with the CAISO’s revised rules. This will likely require revisions to the CAISO tariff to ensure that Hoover and similarly situated resources continue to be RA-eligible.
Application of the MOO to Co-Located Storage: Finally, the Six Cities oppose application of the MOO to both the charge and discharge capabilities of Non-Generator Resources (“NGRs”), unless the CAISO refines its proposal to provide for a transition period applicable to the storage components of co-located resources with grid-charging limitations arising from application of the Investment Tax Credit (“ITC”). As the CAISO is aware, a significant number of mixed fuel resources are expected to enter service in the coming years, and the CAISO has responded by developing participation models to enable these resources to transact in the CAISO’s markets, including the hybrid and co-located resource models.
Unfortunately, the proposed participation rules for co-located resources, including the MOO requirements being formulated in this initiative, reflect that such resources will bid their full charging capabilities into the CAISO markets, a requirement that is incompatible with a way in which many of these resources are likely to have been financed – i.e., in reliance on ITC to partially fund the development of these resources. The applicable ITC rules limit these resources’ ability to comply with a charge-side MOO through restrictions on charging the storage component of these resources from the grid, rather than from the associated variable resource. If the CAISO is to have access through its RA program to mixed fuel resources that have adopted the co-located resource model, then it is critical that the CAISO acknowledge and accommodate the restrictions on these resources that prohibit – and, in some cases, physically prevent through the installation of certain equipment – charging from the grid. If the CAISO fails to establish charge-side MOO requirements that permit resources to mitigate risks of grid charging, then the CAISO is likely to be deprived of access to these resources through the RA program, at least for the initial 5-and-a-half years of their operations.
The CAISO’s participation rules for hybrid and co-located resources are now finalized, or, as in the case of the pending RA MOO and bid insertion obligations, under development in public stakeholder initiatives. This enables parties that are currently negotiating development agreements for mixed fuel resources to consider these obligations and account for any grid charging risks. However, for co-located resources that are expected to come online in the near term and that were procured by CAISO LSEs through power purchase agreements or other development contracts that were negotiated prior to the CAISO’s development of these rules, such resources likely did not account for a mandated charge-side MOO, as this is not an obligation for NGR resources today.
To manage this issue, the Six Cities request that the CAISO adopt a limited mechanism to provide a transition period for a sub-set of co-located resources. During this transition period, the CAISO would not apply the charge-side MOO to co-located resources with grid-charging restrictions, whether such restrictions are embodied in contractual limitations or are applied via equipment that will physically prevent grid charging. This transition period would be applicable to co-located resources for which development agreements (such as a power purchase agreement) were executed prior to January 1, 2021, and would apply for the initial five years after the resource enters operations. The grandfathering mechanism would operate to exclude from the 24x7 MOO only the charging side of the storage resource component, and would not apply to the discharging portion. Creating an exception to permit a temporary grandfathering period for a sub-set of storage resources that are subject to unique federal tax requirements would enable these resources to maximize their participation in the CAISO’s RA program by making the discharge portion of their capacity available to the CAISO while not undermining a critical financial driver in the development of these resources.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
Subject to their comments on other elements of the Proposal relating to the implementation of the UCAP structure, the Six Cities do not oppose the proposals regarding local RA in Section 6.2 of the Proposal.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
Please refer to the comments provided in response to Section 6.2 above.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
In general, the Six Cities do not oppose the CAISO’s proposals as outlined in Section 6.3 of the Proposal. Comments regarding the individual elements of the proposal are provided below.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
The Six Cities support the CAISO’s proposals regarding modifications to the CPM, including, in particular, the CAISO’s commitment to make CPM designations only based upon overall system deficiencies after all RA showings have been made and after having provided an opportunity for LSEs to cure any shortfalls.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
The Six Cities do not oppose the CAISO’s proposals regarding the designation of UCAP/NQC quantities as described in Section 6.3.2. of the Proposal.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
The Six Cities do not oppose the CAISO’s proposal regarding the penalty structure for RMR resources as outlined in Section 6.3.4 of the Proposal.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
With respect to the further evolution of the portfolio assessment element of System RA analysis and sufficiency testing, the Six Cities support the concept of evaluating portfolio sufficiency, i.e., the ability of the RA portfolio to meet load requirements during all hours, not just during system peak periods. As described in their previous sets of comments in this initiative, however, the Six Cities continue to urge the CAISO to supplement the sufficiency analysis based solely on shown RA resources with analysis of all resources expected to be online during the study period. Because non-RA resources do not take on any forward obligation to make themselves available to the CAISO BAA during any specific periods, it makes sense to conduct a portfolio sufficiency test based solely on the production capability of shown RA resources as one metric of the portfolio sufficiency analysis. But non-RA resources within the CAISO BAA do have obligations under the Participating Generator Agreement to comply with all applicable provisions of the CAISO Tariff (Participating Generator Agreement Section 4.2), including, inter alia, (1) responding to Exceptional Dispatch instructions when they are able to do so (Tariff Section 34.11.1), (2) informing the CAISO of changes in operational status (Tariff Section 4.6.1.1), and (3) complying with outage management requirements under Tariff Section 9, including obtaining CAISO approval for planned outages. (Tariff Section 9.3.2.) All Participating Generators also are subject to CAISO control “to prevent an imminent or threatened System Emergency.” (Tariff Section 7.7.2(c)(1).) In light of the foregoing obligations of all Participating Generators, it is unreasonable to completely ignore the capabilities of non-RA resources in evaluating portfolio sufficiency. Such resources are not merely economic energy substitutes, as the CAISO’s Summer Assessment studies implicitly have recognized. The Six Cities, therefore, recommend that if it is technically feasible to do so, the CAISO conduct the portfolio sufficiency tests based on both shown RA resources (both internal and external to the CAISO BAA) and on shown RA resources plus all non-RA resources within the CAISO BAA. The recommended portfolio sufficiency analysis based on all shown RA resources plus all non-RA resources within the CAISO BAA would provide useful supplemental information on the severity of reliability risks arising from any deficiency identified by the sufficiency test based only on shown RA resources and could be factored into the criteria for triggering and scaling backstop procurement. In addition, the broader resource portfolio test could provide guidance on the most efficient approach for any supplemental RA procurement considered necessary. If it is not technically feasible to conduct the portfolio sufficiency tests based on both sets of resource inputs for every month, the CAISO could perform the broader-based test only in months for which the RA only test indicates a deficiency.
With respect to the other pending elements identified in Section 7 of the Sixth Revised Draft Straw Proposal (continuing consideration of a planned outage pool and Flexible RA revisions), the Six Cities will provide comments in response to subsequent straw proposals on those elements.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
The Six Cities have identified an additional topic that merits the CAISO’s consideration as part of this initiative. Specifically, the Six Cities urge the CAISO to reopen consideration of allowing monthly RA showings to include different RA values for a specified resource for different days of the month, subject to the sum of the RA values for each day satisfying the monthly RA requirement for the LSE submitting the showing. As an example, for a resource eligible to provide RA capacity of 100 MW, the Six Cities propose that an LSE be permitted to include variable amounts of capacity from the resource (not to exceed 100 MW) for different days in a monthly showing, provided that the sum of the capacity values for all resources shown by the LSE for a given day equals or exceeds the LSE’s monthly requirement. It is the Six Cities’ understanding that such variable showings currently are permitted for import resources, and the Cities request that the CAISO extend the ability to submit different RA values for a resource for days within a month to include not only import RA resources but also RA resources located within the CAISO BAA. The Six Cities understood this concept to have been included in earlier straw proposals in this initiative, and they strongly recommend that the CAISO reinstate it.
There would be significant, reliability-enhancing benefits of allowing variable daily RA values within monthly showings. If LSEs are required to show the same RA value for a given resource for each day of a month, they are likely to not include the resource in a monthly showing for a month in which they anticipate a need to perform maintenance on the resource. By allowing different values to be submitted for RA resources for different days within a month, resources could effectively substitute for each other for different days (with the CAISO having full visibility in advance of the resources relied upon for each day) while maintaining the total RA shown for each day at the level of the LSE’s requirement. This would facilitate performance of regular maintenance and reduce incentives to hold back RA capacity that has been contracted for by an LSE but is not needed to meet the RA requirement in a given month. It also would support additional bilateral trading of RA capacity among LSEs for substitute capacity purposes. Allowing variable daily RA values within monthly showings is likely to make satisfaction of RA requirements more efficient and thereby make more RA capacity available.
Southern California Edison
Submitted 01/29/2021, 11:46 am
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
SCE appreciates the opportunity to provide the following comments on the CAISO Resource Adequacy (RA) Enhancements Draft Final Proposal and Sixth Revised Straw Proposal dated December 17, 2020[1]. At a high level, SCE provides the following comments on elements in Phase 1 and Phase 2:
- SCE does not support the CAISO import RA proposal because it has not been demonstrated that the proposal is necessary and the proposal would introduce significant challenges in import RA procurement.
- The CAISO proposed a minimum state-of-charge (MSOC) requirement that is not a sustainable solution. Given that the amount of energy storage resources participating in the market is increasing rapidly, the CAISO should focus on development of a long-term solution that is optimal for energy storage resource market participation.
- The CAISO should closely collaborate with the CPUC on its unforced capacity (UCAP) proposal to avoid program misalignment. Changes to the current planning reserve margin (PRM) should be based on rigorous loss-of-load-expectation (LOLE) studies.
- SCE supports the CAISO proposal to maintain net qualifying capacity (NQC) as the compliance instrument and the proposal to create the term DQC (Deliverable QC) to replace NQC.
- SCE supports the changes to the CAISO hydro UCAP proposal that will allow month-ahead updates to the resource UCAP value and increase the maximum capability of the resource following infrastructure upgrades to the resource.
- Must offer obligation (MOO) is a crucial component of the RA construct; a proposal of no real-time MOO for RA resources unless receiving a day-ahead award can create unacceptable market and reliability issues.
- The CAISO should clarify, and amend if necessary, the existing rules that require regulatory must run (RMR) resources’ bidding obligation and provide CAISO the authority to insert bids (when applicable) for and exceptional dispatch RMR resources.
[1] Resource Adequacy Enhancement Draft Final Proposal and Sixth Revised Straw Proposal,
http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-SixthRevisedStrawProposal-ResourceAdequacyEnhancements.pdf.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Please see SCE comments to Question 1 above.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Please see SCE’s comments to Questions 4 – 7 below.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
As discussed during January 5-7 workshops, the CAISO should closely collaborate with the CPUC on its UCAP proposal to avoid program misalignment. A full alignment between CPUC RA rules and CAISO RA rules is essential for LSEs to comply with the rules and for the program to achieve its objectives most effectively and efficiently.
Since under the UCAP proposal, forced outage rates will be addressed in the resources’ UCAP values instead of through the PRM, there is a need to determine the level of PRM under the proposal. An appropriate level of PRM should be based on rigorous studies such as loss of load expectation (“LOLE”) production simulations. An LOLE study is necessary to ensure that a desired level of reliability can be achieved, and that it can be achieved cost-effectively without over- or under-procuring resources. In the LOLE analysis, several factors would need to be considered concurrently in determining the right level of PRM. For example, in achieving a pre-defined level of reliability, the effect of uncertainty needs due to load forecast error and reserves should be evaluated concurrently with the methodology used to derive those values, such as the UCAP methodology proposed by the CAISO. The collective impacts of those factors should be evaluated altogether in an LOLE analysis (including potential diversity benefits among those factors as applicable) to ensure the desired level of reliability can be achieved cost-effectively.
SCE strongly urges that the CAISO, the CPUC and any other relevant agencies to work collaboratively to evaluate the need for adjusting the PRM under the UCAP proposal. As a result of this evaluation, any new PRM should be adopted by all agencies to ensure a common and uniform set of rules to establish the appropriate PRM level. Strong coordination is necessary in order for LSEs to comply with the RA program, to set upfront procurement requirements, and to avoid potential CAISO backstop procurements as much as possible.
On design specifics of the UCAP proposal, SCE supports the CAISO proposal to maintain net qualifying capacity (NQC) as the compliance instrument and the proposal to create a new term DQC (Deliverable QC) to replace NQC. The proposal will address the concerns about impacts to existing long-term contracts under the UCAP proposal. As commented by SCE previously[1], those concerns are significant, making the proposal to maintain NQC as the compliance instrument necessary. SCE also supports the changes to the CAISO hydro UCAP proposal that will allow month-ahead updates to the resource UCAP value and increase the maximum capability of the resource following infrastructure upgrades to the resource. As commented by SCE previously, these changes are necessary to provide correct incentives and will more accurately reflect physical capability of hydro resources[2].
[1] E.g., see April 16, 2020 SCE Comments on Resource Adequacy Enhancements Fourth Revised Straw Proposal, at 1 – 2, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancements-FourthRevisedStrawProposal.pdf.
[2] E.g., see July 30, 2020 SCE Comments on Resource Adequacy Enhancements Fifth Revised Straw Proposal, 4 -5, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
Please see SCE’s comments to Question 4 above. An appropriate level of PRM should be based on rigorous studies such as loss of load expectation (“LOLE”) production simulations and the process should be closely coordinated with CPUC RA process such as consideration of proposals being evaluated under Track 3B.2 of the CPUC RA proceeding.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
Please see SCE comments to Question 4 above. The proposed UCAP construct, as well as the component of sufficiency testing, should be closely coordinated with other proposals being evaluated under Track 3B.2 of the CPUC RA proceeding.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
SCE is concerned with the proposal that RA resources are not subject to the real-time must offer obligation (MOO) unless the resource receives a day-ahead market award. Although SCE understands this proposal is pending on the development of day-ahead market enhancements (DAME) initiative, this proposal raises significant issues. California LSEs procure RA capacity to ensure there is sufficient supply to meet load. RA resources are paid to be available in the CAISO markets all the way through the real-time market if they are capable. The proposal will lead to a net reduction of the pool of RA resources that must be offered into the CAISO real-time market. This can cause increased costs for the ratepayers, for example, in the form of likely increased real-time market clearing prices with the reduction of resource offers from RA resources or a potential increase in market uplift costs. The reduction of the pool of available RA resources in the real-time market could also cause issues for the grid reliability, such as in the instances where load forecast uncertainty can be great or where forced outages for resources that receive day-ahead awards fail to make those resources available in real time.
SCE does not see the current development in DAME would justify the removal of RT MOO for RA resources. To the contrary, as commented under the DAME initiative and previously under this initiative, SCE believes the RT MOO for RA resources should remain[1]. Also as commented before, the proposal would allow a third-party RA resource to bid high (for energy or the proposed new capacity products) to not clear the day-ahead market and therefore bypass the RT MOO. SCE also finds the proposal contradicts the CAISO’s argument for an increased PRM to address perceived large forced outage rates observed in the CAISO markets – the CAISO’s argument seems to point out an increased need for RA capacity, but the proposal would make less RA capacity available in real time. If the CAISO believes the amount of RA capacity should increase (or the RA capacity should be more reliable and dependable), then it seems logical that the CAISO should require RT MOO for all RA resources that are capable of such provision. Further, by not requiring a RT MOO for all RA resources, if capable, is unlikely to reduce the RA procurement costs borne by the LSEs but could increase market costs as described above.
[1] See, e.g., SCE comments on RA Enhancements Fifth Revised Straw Proposal, Jul 30, 2020, at 7-8, available at http://www.caiso.com/InitiativeDocuments/SCEComments-ResourceAdequacyEnhancements-FifthRevisedStrawProposal.pdf; SCE Comments on Day-Ahead Market Enhancements Initiative, July 13, 2020, at 3-4, available at http://www.caiso.com/InitiativeDocuments/SCEComments-DayAheadMarketEnhancementsRevisedStrawProposal.pdf.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
The CAISO should clarify, in addition to TAC areas for which UCAP/NQC to DQC conversion is performed, whether the UCAP requirement for each local area will be provided and if so, how the UCAP requirement at a local area level will be derived.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
Please see SCE comments to Question 8 above.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
As stated in SCE comments under Question 4, the proposed UCAP construct and its components should be closely coordinated with other proposals being evaluated under Track 3B.2 of the CPUC RA proceeding.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
Please see SCE comments to Question 10 above.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
Please see SCE comments to Question 10.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
It was discussed during January 7, 2020 workshop that the existing rules may not provide the CAISO the authority to insert a bid for, or exceptional dispatch, an RMR resource. The existing rules may also not require an RMR resource to offer to the CAISO markets.
The CAISO should confirm this understanding, and amend the existing rules, if necessary, to ensure that RMR resources are required to offer its capacity to the CAISO markets and that the CAISO has authority to insert bids (when applicable) for and exceptional dispatch RMR resources.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
As commented previously, while the CAISO has listed “development of a potential planned outage pool” as an item under Phase 2B, design details are not available. The CAISO should provide details on the longer-term proposal as soon as practical to engage parties in order to achieve the targeted implementation timeline for this item.
Regarding the other two items, i.e., portfolio assessment under UCAP and flexible RA, SCE believes these two items should be closely aligned with Track 3B.2 proposals under the CPUC RA proceeding. For instance, the need for a flexible RA product should be evaluated once a new RA construct is determined and design specifics of a portfolio assessment may also need to change depending on a new RA construct being evaluated under that proceeding.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Vistra Corp.
Submitted 02/01/2021, 04:44 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
For the RA program to be successful in California it is not sufficient for the CAISO to seek to remain aligned with Local Regulatory Authority’s programs, it is essential. Vistra is sympathetic to some elements of the CAISO’s proposal, provided they are implemented in coordination with LRAs. Proposing capacity market rules that result in suppliers selling capacity within California under different Resource Adequacy Requirements (“RAR”) for different products between the LRA and the CAISO is not only administratively burdensome but inefficient. Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
The RA Enhancements Phase 2A proposals if pursued will necessitate changes to the Planning Reserve Margin and changes to the product definition required in its forward contracting. A prudent market design should either account for forced outage risks (1) when establishing the PRM and then procure capacity on an ICAP basis OR (2) when establishing the Qualified Capacity and then set the PRM consistently by excluding the pool wide outage rate from the PRM. Any other combination of these decisions will likely result in inefficient or unreliable market outcomes. If the PRM and product definition changes are not adopted by the LRAs, certain elements of this proposal are not workable. It is prudent to seek to change LRA’s RA program first, such as:
- Defining RA requirements to “maintain physical generating capacity and electrical demand response in terms of unforced capacity”,
- Directing each load-serving entity to maintain physical generating capacity and electrical demand response adequate to meet its load requirements, including, but not limited to, peak and net peak demand and planning and operating reserves.
- Directing recurring process to establish PRM with robust inputs to cover forced outages and planned outages without substitution, and
- Codifying minimum PRM.
Given the CAISO is targeting RA Year 2023 for this project, Vistra believes that it is possible to pursue regulatory or legislative actions to amend the LRA program. After the rotating outages in Summer 2020, the joint energy entities and State Legislature are aligned on pursuing regulatory or legislative changes to ensure California can support reliability in the near to long term. Pursuing holistic reform of the elements raised in this proposal at the legislative level may be appropriate given the momentum to address the identified limitations in the joint entities’ Root Cause Analysis Report. We encourage the CAISO to continue to coordinate with the LRAs and pursue legislative action where appropriate.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Oppose with caveats
Vistra opposes the CAISO proposal to make fundamental RA changes through this stakeholder process that are not coordinated with the LRAs.
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
Vistra supports a capacity market construct that sends appropriate signals to developers to provide a guiding light to which types of projects are both viable and valuable. A prudent market design should either account for forced outage risks (1) when establishing the PRM and then procure capacity on an ICAP basis OR (2) when establishing the Qualified Capacity and then set the PRM consistently by excluding the pool wide outage rate from the PRM. Any other combination of these decisions will likely result in inefficient or unreliable market outcomes. The merit of CAISO’s proposal cannot be evaluated until the Local Regulatory Authorities (“LRA”) determine whether they will adopt changes to California’s Resource Adequacy (“RA”) program in line with this best practice.
Vistra believes two competing RA constructs in California will not improve resource sufficiency. It will only introduce greater challenges to participating in California markets. Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
Vistra understands CAISO has identified issues with the current RA programs that it believes undermines its ability to maintain reliability, including:
- PRM may be based on forced outage rates that are not robust estimates of the pool-wide forced outage rate: CAISO correctly identified in its paper that while ISO-NE has a must-offer obligation (MOO) for the MW contracted to provide capacity, this does not undermine reliability because the forced outage rate in its planning reserve margin is a robust estimate of the pool wide forced outage that needs to be covered by the contracted installed capacity. It is an essential part of ISO-NE capacity framework that there is confidence in the forced outage rate that the Installed Reserve Margin includes to cover the forced outage risk. As an initial step, CAISO should focus on advocating for a PRM that includes a more reasonable forced outage rate that would increase confidence that the quantity of RA capacity procured covers expected pool-wide forced outages.
- Confirmation RA capacity will be available or be replaced if unavailable occurs inappropriately late in the instance that RA capacity cannot be replaced”[1]: The key drivers of this concern appear to be lack of confidence in the forced outage rate included in the PRM and the absence of recognition in determining the PRM that some a planned outage will not be substituted. On the first, requiring the PRM to be established on a recurring basis using the most recently available information on pool-wide forced outages is a more appropriate step. On the latter, the CAISO should explore and be a thought leader in efforts with the CPUC to re-examine PRM methodology including whether additional margin would be appropriate to ensure planning reserves that cover not only forced outages but also the portion of planned outages that are not able to be substituted. Planned maintenance outages are necessary to ensure resources are available when most needed. Further, given the current supply shortage, substitute capacity may not be available during high load and high net load periods. If both elements are included in the PRM and the PRM is regularly updated, it is likely that the reliability concern will be addressed.
We are concerned the proposals may not be workable depending on what decisions the LRAs make about revising their PRMs or procurement directions in terms of UCAP, if any. Vistra has little confidence that each LRA will make the necessary changes to support the proposal at this time. Until there is clarity on how the RA program rules for forward procurement are adopted at the CPUC and other LRAs, it is unclear whether this proposal will be helpful or potentially inefficient. If uncoordinated, we believe there are scenarios that could result in inefficient outcomes and increased costs largely resulting from competing requirements.
[1] Draft Final Proposal and Sixth Revised Straw Proposal Resource Adequacy Enhancements, California ISO, Page 74, http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-SixthRevisedStrawProposal-ResourceAdequacyEnhancements.pdf.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
Vistra recommends the CAISO consider pursuing legislative action to amend the Public Utilities Code to specify the LRA’s PRM must be set at a minimum level or determined by CAISO based on a planning standard established by statute. In addition, a legislative action could be pursued to establish a process for updating the LRA’s PRMs on a regular basis. Vistra suggests a framework for timing and stakeholder engagement like that used by the California Energy Commission in its Integrated Energy Policy Reporting established by Senate Bill 1389[1]. For instance, CAISO’s concern can be addressed by codifying that every two years the PRM will be established through a planning study determine the PRM needed to meet a planning standard based on a reliability metric like expected unserved energy or loss of load expectation. We encourage the CAISO to pursue these legislative changes to ensure alignment and avoid confusion due to competing requirements.
[1] Senate Bill No. 1389, Approved September 14, 2002, http://leginfo.legislature.ca.gov/faces/billNavClient.xhtml?bill_id=200120020SB1389.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
Vistra requests the CAISO include in its next iteration an additional appendix that illustrates the CAISO’s proposal. We ask the CAISO to include a redlined version of its Business Practice Manual for Reliability Requirements Table 7.1.1 for both pre-Day Ahead Market Enhancements implementation and post Day Ahead Market Enhancements implementation (“DAME”). Please show for the two redlined tables (pre and post DAME) the changes to the MOO and bid insertion rules for each resource type and market. This would be helpful to better understand the proposal.
Based on our current understanding, we believe the CAISO proposal for the Must Offer Obligation to be at the Deliverable Qualifying Capacity (“DQC”) may be an appropriate design choice, but it also may not. It is difficult to evaluate the merits of this proposal until CPUC and other LRAs decide whether they will adopt a PRM in UCAP terms, i.e. reduce the PRM by removing forced outages, or redefine NQC in terms of UCAP. Depending on the LRA’s choice, it may be inappropriate to have a MOO established at the DQC. Refer to our response to question no. 3 for more context.
To illustrate, see the matrix below that shows the two open questions and different scenarios based on if the LRA decides to answer yes or no:
|
|
|
Redefine NQC as UCAP
|
|
|
|
Y
|
N
|
|
Reduce PRM by removing forced outages
|
Y
|
Scenario 1: DQC
|
Scenario 3: DQC
|
|
N
|
Scenario 2: New NQC
|
Scenario 4: DQC
(ie LRA rule status quo)
|
Under scenarios 2-4, a key principle is the MOO is appropriately set based on the contracted quantity, the defined NQC either in terms of UCAP or ICAP. We agree there is an exception to this principle for Scenario 1 where the Planning Reserve Margin no longer includes a margin for forced outage rates and the UCAP framework is adopted for that procurement. In this scenario, without the reserve margin to cover the forced outages where the contracted quantity is for UCAP, the MOO should be in ICAP terms to cover the risk of forced outages on the system. However, this is only one of the four scenarios.
Scenario 2 is still a likely scenario where the outcome of the LRA action on these questions will lead to a result where the MOO should be set at the new NQC. The solution for this outcome is different because if the PRM is not reduced to remove forced outages while procurement is required at the new NQC, LSEs will need to procure additional up-front contracts to meet the same PRM with resources that have lower capacity values. In this case, a MOO at DQC will drive even more supply being shown relative to the reliability need having a price suppressive impact.
Scenario 3 is an example of where the two decisions are not well coordinated with procurement of capacity in ICAP terms and the PRM is in UCAP terms, without a forced outage rate. The PRM in UCAP terms will be lower and the ICAP contracts executed to meet this target will result in less capacity being procured than is needed to reliability support the system. In this scenario, the MOO is still appropriately set based on the DQC because it is both the contract quantity term as well as fully needed to support reliability.
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
CAISO should backstop against LRA’s RA requirements, ideally for backstop capacity that is for the same product and in the same terms as the LRA. Stakeholders are currently engaged in discussion of whether the RA program should expand to include sufficient energy requirements through procuring “Net Qualifying Energy” in the current CPUC RA proceeding R.19-11-009. Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
Vistra requests CAISO explicitly exempt legacy RMR units that did not have applied to them the MOO’s previously adopted.
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
Vistra requests the CAISO delay completion of this element until there is regulatory or legislative action to resolve uncertainty as to how the LRA program rules will be amended.
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Vistra is concerned that the mechanics of the CAISO proposal for its availability factor used to derate capacity under its UCAP proposal is flawed. From our review of CAISO proposal for its unavailability metric it does not apply a method that appropriately:
- Establishes a weighted average outage rate based on weighting all outages by the supply cushion metric.
- Estimates tight supply conditions that adversely impact operations that should include hourly RA MWs and hourly non-RA MWs.
By excluding energy only offers, the supply cushion estimate might flag an hour as being a tight “RA supply cushion” when with the inclusion of the energy only offers the system was flush supply relative to demand. Treating that hour as a “tight” hour would ignore the reality that it was not tight supply. The outage during that hour would be inappropriately weighted as being during tight conditions when it was not.
For simplicity, Vistra finds reasonable DMM’s recommendation, where “DMM suggested the CAISO look at all 8760 and weight each hour by the supply cushion”[1]. We request the CAISO adopt the DMM proposal or something similar that adopts weighted average approach based on tight system conditions determined including both RA and non-RA availability.
[1] Draft Final Proposal and Sixth Revised Straw Proposal Resource Adequacy Enhancements, California ISO, Page 81, http://www.caiso.com/InitiativeDocuments/DraftFinalProposal-SixthRevisedStrawProposal-ResourceAdequacyEnhancements.pdf.
Western Area Power Administration
Submitted 01/29/2021, 01:15 pm
1.
Provide a summary of your organization's comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
Western Area Power Administration (WAPA-SNR) is a federal agency responsible for marketing hydropower generated by the federal Central Valley Project (CVP) to meet its statutory responsibilities to serve project-use energy pumping requirements and market available hydropower generation under its Power Marketing Plan to preference power customers. In Northern California, WAPA-SNR serves load in both the Balancing Authority of Northern California (BANC) and the CAISO. WAPA-SNR delivers its generation from many large and small hydro facilities of the CVP to its loads. WAPA-SNR owns, operates, and maintains an extensive high voltage transmission network extending to the load center of Northern California.
WAPA-SNR appreciates the opportunity to provide comments on the CAISO’s Resource Adequacy Enhancement Sixth Revised Straw Proposal.
WAPA-SNR’s CVP generation is used to meet its load obligations in the CAISO through Firm imports into the CAISO BAA. The CVP is an integrated and multipurpose hydroelectric resource. WAPA-SNR supports CAISO Tariff section 40.6.8(e). WAPA-SNR submits that CVP power falls within the exemption for bid insertion as a hydroelectric resource.
2.
Provide your organization’s overall position on the sixth revised straw proposal – phase 2A:
Support with caveats
3.
Provide your organization’s feedback on the System Resource Adequacy topic as described in section 6.1:
4.
Provide your organization’s feedback on the Unforced Capacity Evaluations topic as described in section 6.1.1:
WAPA-SNR serves several types of loads and there are varying degrees of priority among the types of load in the allocation of CVP power. This necessitates the use of several SC IDs for loads situated in the CAISO BAA. For example, pumping project use load levels vary with different water year types. Under this premise, WAPA-SNR supports assessment of UCAP values should be done at the aggregated resource within the BAA or within an SBA. WAPA-SNR supports the CAISO’s use of an LRA established Effective Load Carrying Capability (ELCC) for use as the UCAP/NQC value.
WAPA-SNR supports Outage Definitions with the caveat – that transmission outages within a BAA or SBA be treated equal to CAISO transmission outage and also be excluded. By limiting to the CAISO Controlled Grid, citing the facilities are not owned, operated, or maintained by the generator still provides a preference to a specific set of generators.
5.
Provide your organization’s feedback on the Determining Minimum System RA Requirements topic as described in section 6.1.2:
WAPA-SNR is a Local Regulatory Authority (LRA) and has jurisdiction over meeting System Resource Adequacy obligations of its LSEs in the CAISO BAA. WAPA-SNR provides the CAISO with the reserve margins it has adopted for use in resource adequacy planning matters. WAPA-SNR’s LRA Plan was developed in accordance with Federal procedural requirements under the Administrative Procedure Act and any revisions to the LRA Plan shall be undertaken through the same requirements. In this regard, WAPA-SNR has concerns with CAISO’s implementation and timeline that may result in inconsistencies with WAPA-SNR’s LRA Plan if unable to complete the revision in time. WAPA supports coordinating with CAISO on LRA requirements for determining minimum System RA requirements.
6.
Provide your organization’s feedback on the System RA Showings and Sufficiency Testing topic as described in section 6.1.3:
7.
Provide your organization’s feedback on the Must Offer Obligation and Bid Insertion Modifications topic as described in section 6.1.4:
In accordance with WAPA-SNR’s Power Marketing Plan, Federal power from the CVP system must be delivered to load. In this regard, RA Imports for WAPA-SNR’s jurisdictional LSEs are self-scheduled into the CAISO. These are Firm imports into the CAISO BAA are backed by CVP hydroelectric power. WAPA-SNR believes that the resource shall be exempt from bid insertion by CAISO in accordance with CAISO Tariff section 40.6.8(e).
8.
Provide your organization’s feedback on the Local RA topic as described in section 6.2:
9.
Provide your organization’s feedback on the UCAP in Local RA Studies topic as described in section 6.2.1:
10.
Provide your organization’s feedback on the Backstop Capacity Procurement Provisions topic as described in section 6.3:
11.
Provide your organization’s feedback on the Capacity Procurement Mechanism Modifications topic as described in section 6.3.1:
12.
Provide your organization’s feedback on the Making UCAP/NQC Designations topic as described in section 6.3.2:
13.
Provide your organization’s feedback on the Availability Penalty Structure for RMR Resources topic as described in section 6.3.4:
14.
9. Provide your organization’s feedback on the Phase 2B Pending Enhancements as described in section 7:
15.
Additional comments on the Resource Adequacy Enhancements sixth revised straw proposal – phase 2A:
WAPA hereby provides comments on the Resource Adequacy Enhancements draft final proposal – phase 1 through the attached document with file name "StakeholderCommentTemplate - Draft Final Proposal - Phase 1_WAPA.docx."
